As filed with the Securities and Exchange Commission on September 2, 1997
Registration Nos. 333- and 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
<TABLE>
<CAPTION>
<S> <C>
JP REALTY, INC. PRICE DEVELOPMENT COMPANY,
(Exact name of Registrant as specified in its LIMITED PARTNERSHIP
charter) (Exact name of Registrant as specified in its
charter)
MARYLAND DELAWARE
(State or other jurisdiction of incorporation or (State or other jurisdiction of incorporation or
organization) organization)
87-0515088 87-0516235
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
</TABLE>
35 CENTURY PARK-WAY
SALT LAKE CITY, UTAH 84115
(801) 486-3911
(Address, including zip code, and telephone number,
including area code, of Registrants' principal executive offices)
----------------------
JOHN PRICE
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
JP REALTY, INC.
35 CENTURY PARK-WAY
SALT LAKE CITY, UTAH 84115
(801) 486-3911
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------
COPIES TO:
JAY L. BERNSTEIN, ESQ.
ROGERS & WELLS
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
----------------------`
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time or at one time after the effective date of the Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. <square>
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. <checked-box>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. <square> ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. <square> ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. <square>
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF SECURITIES TO BE PROPOSED MAXIMUM OFFERING PRICE(3) AMOUNT OF
REGISTERED(1)(2) REGISTRATION FEE(4)
<S> <C> <C>
Common Stock(5)......................................
Common Stock Warrants(6).............................
Preferred Stock(7)................................... $147,062,500
Depositary Shares Representing Preferred Stock(8)....
Guarantees(9)........................................
Debt Securities(10).................................. $200,000,000
Total.............................................. $347,062,500 $105,171(11)
</TABLE>
(FOOTNOTES ON NEXT PAGE)
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
constituting a part of this Registration Statement is a combined prospectus and
relates to securities of JP Realty, Inc. registered pursuant to a Registration
Statement on Form S-3 (Registration No. 33-93752).
----------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================
PAGE
<PAGE>
(FOOTNOTES FROM PREVIOUS PAGE)
(1) The Common Stock, Common Stock Warrants, Preferred Stock, Depositary
Shares, Debt Securities and Guarantees (collectively, the "Offered
Securities") registered hereunder may be sold separately, together or as
units with other Offered Securities registered hereunder.
(2) Pursuant to this Registration Statement, JP Realty, Inc. (the "Company")
may issue Common Stock, Common Stock Warrants, Preferred Stock,
Depositary Shares and Guarantees and Price Development Company, Limited
Partnership (the "Operating Partnership") may issue Debt Securities.
(3) The aggregate maximum public offering price of (i) all Common Stock,
Common Stock Warrants, Preferred Stock, Depositary Shares and Guarantees
issued by the Company pursuant to this Registration Statement, including
any of such securities issued upon exchange for or conversion into any
other of such securities, will not exceed $147,062,500 and (ii) all Debt
Securities issued by the Operating Partnership pursuant to this
Registration Statement will not exceed $200,000,000.
(4) The prospectus forming a part of this Registration Statement, as such
prospectus may be amended or supplemented from time to time (the
"Prospectus"), shall be deemed to relate to the $347,062,500 of Offered
Securities being registered pursuant to this Registration Statement and,
pursuant to Rule 429 under the Securities Act, to $52,937,500 of Common
Stock, Common Stock Warrants and Preferred Stock registered and issuable
by the Company pursuant to the Registration Statement on Form S-3,
Registration No. 33-93752 (the "Prior Shelf Registration Statement").
The amount of filing fees associated with such securities registered
pursuant to the Prior Shelf Registration Statement (calculated at 1/29th
of one percent of the total amount of securities registered, the fee in
effect at the time of filing of the Prior Shelf Registration Statement)
is approximately $18,255.
(5) Such indeterminate number of shares of Common Stock as may from time to
time be issued at indeterminate prices or issuable upon conversion of
Preferred Stock or Depositary Shares of the Company registered hereunder
or upon exercise of the Common Stock Warrants registered hereunder, as
the case may be.
(6) Such indeterminate amount and number of Common Stock Warrants,
representing rights to purchase Common Stock registered hereunder.
(7) Such indeterminate number of shares of Preferred Stock as may from time
to time be issued at indeterminate prices.
(8) Such indeterminate number of Depositary Shares to be evidenced by
depositary receipts, representing a fractional interest of a share of
Preferred Stock.
(9) To the extent that any Debt Securities issued by the Operating
Partnership are not deemed to be investment grade, such Debt Securities
will be fully and unconditionally guaranteed by, and will be accompanied
by Guarantees of, the Company. None of the proceeds from such Debt
Securities will be received by the Company in connection with the
issuance of the Guarantees.
(10) Such indeterminate amount of Debt Securities, as may from time to time be
issued by the Operating Partnership, which will either be non-convertible
investment grade debt securities or other non-convertible debt securities
that are fully and unconditionally guaranteed by the Company.
(11) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
<PAGE>
Subject to Completion
Preliminary Prospectus Dated September 2, 1997
PROSPECTUS
$400,000,000
JP REALTY, INC.
COMMON STOCK, PREFERRED STOCK, COMMON STOCK WARRANTS,
DEPOSITARY SHARES AND GUARANTEES
PRICE DEVELOPMENT COMPANY,
LIMITED PARTNERSHIP
DEBT SECURITIES
JP Realty, Inc., a Maryland corporation (the "Company"), may from time to
time offer in one or more series (i) shares of its common stock, par value
$.0001 per share (the "Common Stock"); (ii) shares or fractional shares of its
preferred stock, par value $.0001 per share (the "Preferred Stock"), which may
be issued in the form of depositary shares (the "Depositary Shares") evidenced
by depositary receipts; or (iii) warrants to purchase Common Stock (the "Common
Stock Warrants"), with an aggregate public offering price of up to
$200,000,000. Price Development Company, Limited Partnership, a Delaware
limited partnership and a majority-owned subsidiary of the Company (the
"Operating Partnership"), may from time to time offer in one or more series
unsecured non-convertible investment grade debt securities or other non-
convertible debt securities which will be fully and unconditionally guaranteed
by the Company (any such debt securities being referred to herein as "Debt
Securities" and any such guarantees being referred to herein as "Guarantees"),
with an aggregate public offering price of up to $200,000,000. The Common
Stock, Preferred Stock, Common Stock Warrants, Depositary Shares, Debt
Securities and Guarantees (collectively, the "Offered Securities") may be
offered separately or together, in separate series, in amounts, at prices and
on terms to be determined at the time of offering and set forth in one or more
supplements to this Prospectus (each, a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Common Stock,
any public offering price; (ii) in the case of Preferred Stock, the specific
title and stated value, any distribution, liquidation, redemption, conversion,
voting and other rights and any initial public offering price; (iii) in the
case of Common Stock Warrants, the duration, offering price, exercise price and
detachability features; (iv) in the case of Depositary Shares, the fractional
share of Preferred Stock represented by each such Depositary Share; and (v) in
the case of Debt Securities, the title, aggregate principal amount,
denominations, maturity, rate, if any (which may be fixed or variable), or
method of calculation thereof, time of payment of any interest, any terms for
redemption at the option of the Operating Partnership or the holder, any terms
for sinking fund payments, rank, any conversion or exchange rights, any
Guarantees, and the initial public offering price and any other terms in
connection with the offering and sale of such Debt Securities. In addition,
such specific terms may include limitations on direct or beneficial ownership
and restrictions on transfer of the Offered Securities, in each case as may be
appropriate to preserve the status of the Company as a real estate investment
trust ("REIT") for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about all material federal income tax considerations relating to,
and any listing on a securities exchange of, the Offered Securities covered by
such Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time by the Company or the Operating Partnership, or to or through
underwriters or dealers. If any agents or underwriters are involved in the
sale of any of the Offered Securities, their names, and any applicable purchase
price, fee, commission or discount arrangement between or among them, will be
set forth, or will be calculable from the information set forth, in the
applicable Prospectus Supplement. See "Plan of Distribution." No Offered
Securities may be sold without delivery of the applicable Prospectus Supplement
describing the method and terms of the offering of such series of Offered
Securities.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is , 1997
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE OPERATING PARTNERSHIP OR ANY
UNDERWRITERS, AGENTS OR DEALERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY AND ITS SUBSIDIARIES OR THE OPERATING PARTNERSHIP SINCE
THE DATE HEREOF OR THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Following the
sale of any Debt Securities hereunder by the Operating Partnership, the
Operating Partnership may become subject to the informational requirements of
the Exchange Act and, if so subject, will be required to file reports and other
information with the Commission. The Company's and the Operating Partnership's
Registration Statement on Form S-3 (the "Registration Statement"), the exhibits
and schedules forming a part thereof and the reports, proxy statements and
other information filed by the Company or the Operating Partnership can be
inspected and copied, at the prescribed rates, at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at Seven World
Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661. Electronic filings of the
Company made through the Electronic Data Gathering, Analysis and Retrieval
System are publicly available through the Commission's web site
(http://www.sec.gov). The Company's Common Stock is listed on the New York
Stock Exchange (the "NYSE") and similar information concerning the Company may
be inspected and copied at the offices of the NYSE at 20 Broad Street, New
York, New York 10005.
This Prospectus constitutes a part of the Registration Statement filed by
the Company and the Operating Partnership with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain of the information contained in the Registration Statement and
the exhibits and schedules thereto, in accordance with the rules and
regulations of the Commission. For further information concerning the Company,
the Operating Partnership and the Offered Securities, reference is hereby made
to the Registration Statement and the exhibits and schedules filed therewith,
which may be inspected without charge at the office of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and copies of which may be obtained
from the Commission at prescribed rates. Any statements contained herein
concerning the provisions of any document are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
FORWARD-LOOKING INFORMATION
Certain information both included and incorporated by reference herein
may contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act, and as such may involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company or the Operating
Partnership to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. Forward-
looking statements, which are based on certain assumptions and describe future
plans, strategies and expectations of the Company or the Operating Partnership,
are generally identifiable by use of the words "may," "will," "should,"
"expect," "anticipate," estimate," "believe," "intend" or "project" or the
negative thereof or other variations thereon or comparable terminology.
Factors which could have a material adverse effect on the operations and future
2
<PAGE>
prospects of the Company or the Operating Partnership include, but are not
limited to, changes in: economic conditions generally and the real estate
market specifically, legislative/regulatory changes (including changes to laws
governing the taxation of REITs), availability of capital, interest rates,
competition, supply and demand for properties in current and proposed market
areas of the Company and the Operating Partnership and general accounting
principles, policies and guidelines applicable to REITs. These risks and
uncertainties should be considered in evaluating any forward-looking statements
contained herein.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company (Commission File No. 1-12560)
which have been filed with the Commission are hereby incorporated by reference
to this Prospectus.
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997;
4. The Company's Current Report on Form 8-K, dated January 22, 1997;
5. The Company's Current Report on Form 8-K, dated June 30, 1997; and
6. The Company's Registration Statement on Form 8-A, dated November
15, 1993, which contains a description of the Common Stock, including any
amendment or report filed for the purpose of updating such description.
All documents filed by the Company or the Operating Partnership pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering of the Offered
Securities shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the respective dates of filing such documents.
Any statement or information contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed modified or
superseded for the purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company and the Operating Partnership hereby undertake to provide
without charge to each person to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference herein (not including any exhibits to the information
that is incorporated by reference unless such exhibits are specifically
incorporated by reference to the information that this Prospectus
incorporates). Requests should be directed to: JP Realty, Inc., 35 Century
Park-Way, Salt Lake City, Utah 84115, Attn.: M. Scott Collins, Vice President -
Chief Financial Officer and Treasurer, telephone number (801) 486-3911.
3
<PAGE>
THE COMPANY AND THE OPERATING PARTNERSHIP
JP Realty, Inc., a Maryland corporation (the "Company"), is a fully
integrated, self-administered and self-managed real estate investment trust
("REIT") primarily engaged in the ownership, leasing, management, operation,
development, redevelopment and acquisition of retail properties in Utah, Idaho,
Colorado, Arizona, Nevada, New Mexico and Wyoming (the "Intermountain Region")
as well as in Oregon, Washington and California. The Company was formed on
September 8, 1993 to continue and expand the business, commenced in 1957, of
certain companies affiliated with John Price, Chairman of the Board and Chief
Executive Officer of the Company. Based on total gross leasable area, the
Company owns and operates the largest retail property portfolio in the states
of Utah, Idaho and Wyoming, and one of the largest in the Intermountain Region.
As of August 25, 1997, the Company's portfolio was comprised of 46 retail
properties (the "Properties"), including 14 enclosed regional malls, 24
community centers and two free-standing retail properties located in ten states
and six mixed-use commercial properties located primarily in the Salt Lake
City, Utah metropolitan area. As of that date, the Properties contained an
aggregate of approximately 11.5 million square feet of total gross leasable
area, of which approximately 9.6 million square feet was Company owned.
All of the Properties or interests therein are held by, and all of the
Company's business operations are conducted through, Price Development Company,
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"). As of August 25, 1997, the Company owned an approximate 83%
controlling general partner interest in the Operating Partnership. As general
partner of the Operating Partnership, the Company has unilateral control and
complete responsibility for the management of the Operating Partnership and
over each of the Properties. The Company's Common Stock is listed on the NYSE
under the Symbol "JPR."
The Company's management has an average of 23 years of experience in the
ownership, leasing, management, operation, development, redevelopment and
acquisition of regional malls, community shopping centers and other commercial
properties. As of August 25, 1997, the Company had 457 employees, including a
corporate staff of 76 individuals including senior management, and 381 property
management personnel. The Company's and the Operating Partnership's executive
offices are located at 35 Century Park-Way, Salt Lake City, Utah 84115, and
their telephone number is (801) 486-3911.
USE OF PROCEEDS
Except as otherwise provided in the applicable Prospectus Supplement,
proceeds to the Company from the sale of the Offered Securities will be added
to the working capital of the Company and will be available for general
corporate purposes, which may include the repayment of indebtedness, the
financing of capital commitments and possible future acquisitions associated
with the continued expansion of the Company's business.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for (i) the six months
ended June 30, 1997 was 4.3x and (ii) the fiscal years ended December 31, 1996
and 1995, the year ended December 31, 1994 (which includes results of
operations of the Company's predecessors, which consisted of a group of
affiliated companies owned and controlled by John Price (the "Predecessor
Companies"), for the period of January 1, 1994 through January 20, 1994) and
the years ended December 31, 1993 and 1992 (which are based on the results of
operations of the Predecessor Companies) was 3.65x, 3.61x, 3.20x, 1.19x and
1.09x, respectively. To date, the Company has not issued any Preferred Stock;
therefore, the ratios of earnings to combined fixed charges and Preferred Stock
distributions are the same as the ratios of earnings to fixed charges.
The ratios of earnings to fixed charges presented above were computed by
dividing the Company's earnings by fixed charges. For this purpose, earnings
have been calculated by adding fixed charges (excluding capitalized interest)
to income before extraordinary item and minority interest of holders of units
of limited partner interests in the Operating Partnership (the "PDC Units").
4
<PAGE>
Fixed charges consist of interest costs, whether expensed or capitalized, the
interest component of rental expense, if any, and amortization of deferred
financing costs (including amounts capitalized).
Prior to the completion of the Company's initial public offering on
January 21, 1994 (the "IPO"), the Predecessor Companies operated in a highly
leveraged manner utilizing traditional single-asset mortgage loans and
construction loans as their principal source of outside capital. In connection
with completion of the IPO, the Company reorganized the Predecessor Companies
into a single consolidated entity and substantially deleveraged their asset
base, resulting in a significantly improved ratio of earnings to fixed charges.
DESCRIPTION OF COMMON STOCK
GENERAL
Under the Company's Amended and Restated Articles of Incorporation (the
"Charter"), the Company has authority to issue 200,000,000 shares of capital
stock, par value $.0001 per share, with 124,800,000 of such shares designated
as Common Stock. At August 25, 1997, the Company had outstanding 17,386,627
shares of Common Stock. In addition, the Company has reserved for issuance (i)
3,678,390 shares of Common Stock upon exchange of the PDC Units; and (ii)
1,013,793 shares of Common Stock upon exercise of stock options that have been,
or are available to be, granted under the Company's 1993 Stock Option Plan.
Under Maryland law, stockholders generally are not responsible for a
corporation's debts or obligations. The following descriptions do not purport
to be complete and are subject to, and qualified in their entirety by reference
to, the more complete descriptions thereof set forth in the following
documents: (i) the Charter and (ii) the Company's Amended and Restated By-Laws
(the "By-Laws"), which documents are exhibits to this Registration Statement.
TERMS
Subject to the preferential rights of any other shares or series of
capital stock, including, without limitation, the Company's Price Group Stock,
par value $.0001 per share (the "Price Group Stock"), and to the provisions of
the Charter regarding excess stock, par value $.0001 per share ("Excess
Stock"), holders of shares of Common Stock will be entitled to receive
distributions on shares of Common Stock if, as and when authorized and declared
by the Board of Directors out of assets legally available therefor and to share
ratably in the assets of the Company legally available for distribution to its
stockholders in the event of its liquidation, dissolution or winding up after
payment of, or adequate provision for, all known debts and liabilities of the
Company. Under the Charter, holders of shares of Price Group Stock are
entitled to receive distributions at a rate per share equal to 80% of any
distributions declared by the Board of Directors, out of assets legally
available therefor, in respect of the Common Stock.
Subject to the preferential rights of the Price Group Stock with respect
to the election of directors and to the provisions of the Charter regarding
Excess Stock, each outstanding share of Common Stock entitles the holder to one
vote on all matters submitted to a vote of stockholders. No cumulative voting
rights for the election of directors will attach to shares of Common Stock or
Price Group Stock. For the period that John Price, his spouse and children,
any lineal descendants of any of the foregoing, any estates of any of the
foregoing, any trusts now or hereafter established for the benefit of any of
the foregoing and any other entity now or hereafter controlled by any of the
foregoing (collectively, the "Price Group") continues to hold a combined 10% or
greater direct or indirect economic interest in the Operating Partnership, the
holders of the Price Group Stock will elect two of the seven members of the
Board of Directors and the holders of the Common Stock and Price Group Stock,
voting together as a single class, will elect the remaining five members of the
Board of Directors. After the combined direct or indirect economic interest
held by the Price Group in the Operating Partnership falls below 10%, the
holders of the Price Group Stock will not, as a class, be entitled to elect any
of the members of the Board of Directors, but will vote together with the
Common Stock, as a single class, to elect all seven members of the Board of
Directors. In addition, any change in the size of the Board of Directors must
be approved by a majority of the outstanding shares of the Price Group Stock.
5
<PAGE>
Holders of Common Stock have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any securities of the Company.
The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm.
Pursuant to the Maryland General Corporation Law ("MGCL"), a corporation
generally cannot dissolve, amend its Charter, merge, sell all or substantially
all of its assets, engage in a share exchange or engage in similar transactions
outside the ordinary course of business unless approved by the affirmative vote
of stockholders holding at least two-thirds of the shares entitled to vote on
the matter unless a lesser percentage (but not less than a majority of all of
the votes to be cast on the matter) is set forth in the corporation's Articles
of Incorporation. The Charter provides that such transactions, with the
exception of an amendment of the Charter (i) affecting certain changes relating
to the Board of Directors or the terms of the Price Group Stock or (ii) to
limit stockholder proposals and nominations, can be affected by a vote of a
majority of the shares entitled to vote on such matters. With respect to the
matters set forth in items (i) and (ii) above, the Charter provides that it may
only be amended upon the affirmative vote of not less than 80% of the aggregate
votes entitled to vote thereon.
Provisions of the Charter described below under "Restrictions on
Transfers of Capital Stock," together with other provisions of the Charter and
the MGCL, may discourage a takeover or other transaction in which holders of
some, or a majority, of shares of Common Stock might receive a premium for
their shares over the then-prevailing market price or which such holders might
believe to be otherwise in their best interest.
RESTRICTIONS ON TRANSFER AND OWNERSHIP
For the Company to qualify as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"), not more than 50% in value of its outstanding
Common Stock, Preferred Stock or Price Group Stock (collectively, the "Equity
Stock") may be owned, directly or indirectly, by five or fewer individuals (as
defined in the Code to include certain entities) during the last half of a
taxable year. To assist the Company in meeting this requirement, the Charter
contains certain provisions restricting certain transfers of shares of Equity
Stock and limiting the beneficial ownership, directly or indirectly, of the
Company's outstanding Equity Stock. See "Restrictions on Transfers of Capital
Stock."
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.
DESCRIPTION OF PREFERRED STOCK
GENERAL
Under the Charter, the Company has authority to issue 200 million shares
of capital stock, par value $.0001 per share, of which 124,800,000 shares have
been designated as Common Stock, 200,000 of which have been designated as Price
Group Stock and 75,000,000 of which have been designated as Excess Stock. As
of the date hereof, none of the shares of capital stock has been designated as
Preferred Stock. Under the Charter, shares of Common Stock or Excess Stock may
be redesignated by the Board of Directors as Preferred Stock and, following
such redesignation, may be issued from time to time, in one or more series of
Preferred Stock, as authorized by the Board of Directors. Prior to issuance of
shares of each series, the Board of Directors is required by the MGCL and the
Charter to fix for each series, subject to the provisions of the Charter
regarding Price Group Stock, the terms, preferences, conversion or other
rights, voting powers, restrictions, limitations as to distributions or other
distributions, qualifications and terms or conditions of redemption, as are
permitted by Maryland law. The Preferred Stock will, when issued, be fully
paid and nonassessable and will have no preemptive rights. The Board of
Directors could authorize the issuance of shares of Preferred Stock with terms
and conditions that could have the effect of discouraging a takeover or other
transaction that holders of Common Stock might believe to be in their best
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interests or in which holders of some, or a majority, of the shares of Common
Stock might receive a premium for their shares over the then market price of
such shares of Common Stock.
TERMS
The following description of the Preferred Stock sets forth certain
general terms and provisions of the Preferred Stock to which any Prospectus
Supplement may relate. The statements below describing the Preferred Stock are
in all respects subject to and qualified in their entirety by reference to the
applicable provisions of the Charter and the By-Laws and any articles
supplementary to the Charter designating terms of a series of Preferred Stock
(the "Articles Supplementary").
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including:
(1) the title and stated value of such Preferred Stock;
(2) the number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such
Preferred Stock;
(3) the distribution rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred
Stock;
(4) the date from which distributions on such Preferred Stock shall
accumulate, if applicable;
(5) the provision for a sinking fund, if any, for such Preferred Stock;
(6) the provision for redemption, if applicable, of such Preferred
Stock;
(7) any listing of such Preferred Stock on any securities exchange;
(8) the terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock, including the
conversion price or rate (or manner of calculation thereof);
(9) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(10) a discussion of federal income tax considerations applicable to
such Preferred Stock;
(11) the relative ranking and preference of such Preferred Stock as to
distribution rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company;
(12) any limitations on issuance of any series of Preferred Stock
ranking senior to or on a parity with such series of Preferred
Stock as to distribution rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company; and
(13) any limitations on direct or beneficial ownership and restrictions
on transfer, in each case as may be appropriate to preserve the
status of the Company as a REIT.
RANK
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will, with respect to distribution rights and rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of Common Stock or Price Group Stock of the Company and to
all equity securities ranking junior to such Preferred Stock with respect to
distribution rights or rights upon liquidation, dissolution or winding up of
the Company; (ii) on a parity with all equity securities issued by the Company,
the terms of which specifically provide that such equity securities rank on a
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parity with the Preferred Stock with respect to distribution rights or rights
upon liquidation, dissolution or winding up of the Company; and (iii) junior to
all equity securities issued by the Company, the terms of which specifically
provide that such equity securities rank senior to the Preferred Stock with
respect to distribution rights or rights upon liquidation, dissolution or
winding up of the Company.
DISTRIBUTIONS
Holders of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors, out of assets of
the Company legally available for payment, cash distributions at such rates and
on such dates as will be set forth in the applicable Prospectus Supplement.
Each such distribution shall be payable to holders of record as they appear on
the share transfer books of the Company on such record dates as shall be fixed
by the Board of Directors.
Distributions on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement.
Distributions, if cumulative, will be cumulative from and after the date set
forth in the applicable Prospectus Supplement. If the Board of Directors fails
to declare a distribution payable on a distribution payment date on any series
of the Preferred Stock for which distributions are noncumulative, then the
holders of such series of the Preferred Stock will have no right to receive a
distribution in respect of the distribution period ending on such distribution
payment date, and the Company will have no obligation to pay the distribution
accrued for such period, whether or not distributions on such series are
declared payable on any future distribution payment date.
If Preferred Stock of any series is outstanding, no distributions will be
declared or paid or set apart for payment on any capital stock of the Company
of any other series ranking, as to distributions, on a parity with or junior to
the Preferred Stock of such series for any period, unless (i) if such series of
Preferred Stock has a cumulative distribution, full cumulative distributions
have been or contemporaneously are declared and paid, or declared and a sum
sufficient for the payment thereof is set apart for such payment on the
Preferred Stock of such series for all past distribution periods and the then
current distribution period, or (ii) if such series of Preferred Stock does not
have a cumulative distribution, full distributions for the then current
distribution period have been or contemporaneously are declared and paid, or
declared and a sum sufficient for the payment thereof is set apart for such
payment on the Preferred Stock of such series. When distributions are not paid
in full (or a sum sufficient for such full payment is not so set apart) upon
Preferred Stock of any series and the shares of any other series of Preferred
Stock ranking on a parity as to distributions with the Preferred Stock of such
series, all distributions declared upon Preferred Stock of such series and any
other series of Preferred Stock ranking on a parity as to distributions with
such Preferred Stock shall be declared pro rata so that the amount of
distributions declared per share of Preferred Stock of such series and such
other series of Preferred Stock shall in all cases bear to each other the same
ratio that accrued distributions per share on the Preferred Stock of such
series (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such Preferred Stock does not
have a cumulative distribution) and such other series of Preferred Stock bear
to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any distribution payment or payments on Preferred Stock
of such series that may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative distribution, full cumulative
distributions on the Preferred Stock of such series have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof is set apart for payment for all past distribution periods
and the then current distribution period, or (ii) if such series of Preferred
Stock does not have a cumulative distribution, full distributions on the
Preferred Stock of such series have been or contemporaneously are declared and
paid, or declared and a sum sufficient for the payment thereof is set apart for
payment for the then current distribution period, no distributions (other than
in shares of Common Stock, Price Group Stock or other shares of capital stock
ranking junior to the Preferred Stock of such series as to distributions and
upon liquidation) shall be declared or paid or set aside for payment nor shall
any other distribution be declared or made upon the Common Stock, Price Group
Stock or any other capital stock of the Company ranking junior to or on a
parity with the Preferred Stock of such series as to distributions or upon
liquidation, nor shall any shares of Common Stock, or any other shares of
capital stock of the Company ranking junior to or on a parity with the
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Preferred Stock of such series as to distributions or upon liquidation, be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any such
shares) by the Company (except by conversion into or exchange for other capital
stock of the Company ranking junior to the Preferred Stock of such series as to
distributions and upon liquidation).
Any distribution payment made on shares of a series of Preferred Stock
shall first be credited against the earliest accrued but unpaid distribution
due with respect to shares of such series that remain payable.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred
Stock will be subject to mandatory redemption or redemption at the option of
the Company, as a whole or in part, in each case upon the terms, at the times
and at the redemption prices set forth in such Prospectus Supplement.
The applicable Prospectus Supplement relating to a series of Preferred
Stock that is subject to mandatory redemption will specify the number of shares
of such Preferred Stock that shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to all accrued and unpaid
distributions thereon (which shall not, if such Preferred Stock does not have a
cumulative distribution, include any accumulation in respect of unpaid
distributions for prior distribution periods) to the date of redemption. The
redemption price may be payable in cash or other property, as specified in the
applicable Prospectus Supplement. If the redemption price for Preferred Stock
of any series is payable only from the net proceeds of the issuance of shares
of capital stock of the Company, the terms of such Preferred Stock may provide
that if no such shares of capital stock shall have been issued, or to the
extent the net proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, such Preferred Stock shall automatically
and mandatorily be converted into the applicable shares of capital stock of the
Company pursuant to conversion provisions specified in the applicable
Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if a series of Preferred Stock
has a cumulative distribution, full cumulative distributions on all shares of
such series of Preferred Stock shall have been or contemporaneously are
declared and paid, or declared and a sum sufficient for the payment thereof set
apart for payment for all past distribution periods and the then current
distribution period, or (ii) if a series of Preferred Stock does not have a
cumulative distribution, full distributions on all shares of the Preferred
Stock of such series have been or contemporaneously are declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment for
the then current distribution period, no shares of such series of Preferred
Stock shall be redeemed unless all outstanding shares of Preferred Stock of
such series are simultaneously redeemed; PROVIDED, HOWEVER, that the foregoing
shall not prevent the purchase or acquisition of Preferred Stock of such series
to preserve the REIT status of the Company or pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Preferred Stock of such series. In addition, unless (i) if such series of
Preferred Stock has a cumulative distribution, full cumulative distributions on
all outstanding shares of such series of Preferred Stock have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof set apart for payment for all past distribution periods and
the then current distribution period, or (ii) if such series of Preferred Stock
does not have a cumulative distribution, full distributions on the Preferred
Stock of such series have been or contemporaneously are declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment for
the then current distribution period, the Company shall not purchase or
otherwise acquire directly or indirectly any shares of such series of Preferred
Stock (except by conversion into or exchange for capital shares of the Company
ranking junior to the Preferred Stock of such series as to distributions and
upon liquidation); PROVIDED, HOWEVER, that the foregoing shall not prevent the
purchase or acquisition of shares of Preferred Stock of such series to preserve
the REIT status of the Company or pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding shares of Preferred Stock of
such series.
If fewer than all of the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares
held or for which redemption is requested by such holder (with adjustments to
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avoid redemption of fractional shares) or by any other equitable manner
determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such
Preferred Stock are to be surrendered for payment of the redemption price; (v)
that distributions on the shares to be redeemed will cease to accrue on such
redemption date; and (vi) the date upon which the holder's conversion rights,
if any, as to such shares shall terminate. If fewer than all the shares of
Preferred Stock of any series are to be redeemed, the notice mailed to each
such holder thereof shall also specify the number of shares of Preferred Stock
to be redeemed from each such holder. If notice of redemption of any Preferred
Stock has been given and if the funds necessary for such redemption have been
set aside by the Company in trust for the benefit of the holders of any
Preferred Stock so called for redemption, then from and after the redemption
date distributions will cease to accrue on such Preferred Stock, and all rights
of the holders of such shares will terminate, except the right to receive the
redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Company, then, before any distribution or payment shall
be made to the holders of any Common Stock, Price Group Stock, Excess Stock or
any other class or series of capital stock of the Company ranking junior to the
Preferred Stock in the distribution of assets upon any liquidation, dissolution
or winding up of the Company, the holders of each series of Preferred Stock
shall be entitled to receive out of assets of the Company legally available for
distribution to stockholders liquidating distributions in the amount of the
liquidation preference per share, if any, set forth in the applicable
Prospectus Supplement, plus an amount equal to all distributions accrued and
unpaid thereon (which shall not include any accumulation in respect of unpaid
noncumulative distributions for prior distribution periods). After payment of
the full amount of the liquidating distributions to which they are entitled,
the holders of Preferred Stock will have no right or claim to any of the
remaining assets of the Company. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of the
Company are insufficient to pay the amount of the liquidating distributions on
all outstanding shares of Preferred Stock and the corresponding amounts payable
on all shares of other classes or series of capital stock of the Company
ranking on a parity with the Preferred Stock in the distribution of assets,
then the holders of the Preferred Stock and all other such classes or series of
capital stock ranking on parity with the Preferred Stock shall share ratably in
any such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders
of Preferred Stock, the remaining assets of the Company shall be distributed
among the holders of any other classes or series of capital stock ranking
junior to the Preferred Stock upon liquidation, dissolution or winding up,
according to their respective rights and preferences and in each case according
to their respective number of shares. For such purposes, the consolidation or
merger of the Company with or into any other corporation, trust or entity, or
the sale, lease or conveyance of all or substantially all of the property or
business of the Company, shall not be deemed to constitute a liquidation,
dissolution or winding up of the Company.
VOTING RIGHTS
Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Stock, so long as
any shares of Preferred Stock of a series remain outstanding, the Company will
not, without the affirmative vote or consent of the holders of at least a
majority of the shares of such series of Preferred Stock outstanding at the
time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (i) authorize or create, or increase the
authorized or issued amount of, any class or series of capital stock ranking
prior to such series of Preferred Stock with respect to payment of
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distributions or the distribution of assets upon liquidation, dissolution or
winding up or reclassify any authorized capital stock of the Company into such
shares, or create, authorize or issue any obligation or security convertible
into or evidencing the right to purchase any such shares, or (ii) amend, alter
or repeal the provisions of the Charter or the Articles Supplementary for such
series of Preferred Stock, whether by merger, consolidation or otherwise (an
"Event"), so as to materially and adversely affect any right, preference,
privilege or voting power of such series of Preferred Stock or the holders
thereof; PROVIDED, HOWEVER, with respect to the occurrence of any Event set
forth in (ii) above, so long as the Preferred Stock remains outstanding with
the terms thereof materially unchanged, taking into account that upon the
occurrence of an Event the Company may not be the surviving entity, the
occurrence of any such Event shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting power of holders of
Preferred Stock; and PROVIDED FURTHER that (a) any increase in the amount of
the authorized Preferred Stock or the creation or issuance of any other series
of Preferred Stock or (b) any increase in the amount of authorized shares of
such series or any other series of Preferred Stock, in each case ranking on a
parity with or junior to the Preferred Stock of such series with respect to
payment of distributions or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of such series of Preferred Stock
shall have been redeemed or called for redemption and sufficient funds shall
have been deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred
Stock is convertible into Common Stock will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
shares of Common Stock into which the shares of Preferred Stock are
convertible, the conversion price or rate (or manner of calculation thereof),
the conversion period, provisions as to whether conversion will be at the
option of the holders of the Preferred Stock or the Company, the events
requiring an adjustment of the conversion price and the provisions affecting
conversion in the event of the redemption of such series of Preferred Stock.
RESTRICTIONS ON TRANSFER AND OWNERSHIP
The provisions contained in the Company's Charter restricting certain
transfers of shares of Equity Stock and limiting the beneficial ownership,
directly or indirectly, of the Company's outstanding Equity Stock will effect
any shares of Preferred Stock that may from time to time be issued by the
Company. See "Restrictions on Transfers of Capital Stock."
TRANSFER AGENT
The transfer agent and registrar for the Preferred Stock will be set
forth in the applicable Prospectus Supplement.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of Common
Stock. Common Stock Warrants may be issued independently or together with any
other Offered Securities offered by any Prospectus Supplement and may be
attached to or separate from such Offered Securities. Each series of Common
Stock Warrants will be issued under a separate warrant agreement (each, a
"Warrant Agreement") to be entered into between the Company and a warrant agent
specified in the applicable Prospectus Supplement (the "Warrant Agent"). The
Warrant Agent will act solely as an agent of the Company in connection with the
Common Stock Warrants of such series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners of
Common Stock Warrants. The following description of the Common Stock Warrants
sets forth certain general terms and provisions of the Common Stock Warrants to
which any Prospectus Supplement may relate. The statements below describing
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the Common Stock Warrants and the applicable Warrant Agreements are in all
respects subject to and qualified in their entirety by any further terms and
provisions that may be set forth in any applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the
Common Stock Warrants in respect of which this Prospectus is being delivered,
including, where applicable, the following:
(1) the title of such Common Stock Warrants;
(2) the aggregate number of such Common Stock Warrants;
(3) the price or prices at which such Common Stock Warrants will be
issued;
(4) the designation, number and terms of the shares of Common Stock
purchasable upon exercise of such Common Stock Warrants;
(5) the designation and terms of the other Offered Securities with
which such Common Stock Warrants are issued and the number of such
Common Stock Warrants issued with each such Offered Security;
(6) the date, if any, on and after which such Common Stock Warrants and
the related Common Stock will be separately transferable;
(7) the price at which each share of Common Stock purchasable upon
exercise of such Common Stock Warrants may be purchased;
(8) the date on which the right to exercise such Common Stock Warrants
shall commence and the date on which such right shall expire;
(9) the minimum or maximum amount of such Common Stock Warrants which
may be exercised at any one time;
(10) information with respect to book-entry procedures, if any;
(11) a discussion of certain federal income tax considerations; and
(12) any other terms of such Common Stock Warrants, including terms,
procedures and limitations relating to the exchange and exercise of
such Common Stock Warrants.
Each Common Stock Warrant will entitle the holder thereof to purchase
such number of shares of Common Stock, as the case may be, at such exercise
price as shall, in each case, be set forth in, or calculable from, the
applicable Prospectus Supplement relating to the offered Common Stock Warrants.
Prior to the exercise of any Common Stock Warrants, holders of such Common
Stock Warrants will not have any rights of holders of Common Stock, including
the right to receive payments of distributions, if any, on such Common Stock,
or to exercise any applicable right to vote. After the close of business on
the expiration date of any series of Common Stock Warrants (or such later date
to which such expiration date may be extended by the Company), unexercised
Common Stock Warrants will become void.
Common Stock Warrants may be exercised by delivering to the Warrant Agent
payment, as provided in the applicable Prospectus Supplement, of the amount
required to purchase the Common Stock purchasable upon such exercise and
otherwise by following the procedures specified in such Prospectus Supplement.
The Warrant Agreements may be amended or supplemented without the consent
of the holders of the Common Stock Warrants issued thereunder to effect changes
that are not inconsistent with the provisions of the Common Stock Warrants and
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that do not adversely affect the interests of the holders of the Common Stock
Warrants.
Reference is made to the section captioned "Description of Common Stock"
for a general description of the Common Stock to be acquired upon the exercise
of the Common Stock Warrants, including a description of certain restrictions
on the ownership of Common Stock.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular series of Preferred Stock, as specified in the applicable Prospectus
Supplement. Shares of Preferred Stock of each series represented by Depositary
Shares will be deposited under a separate deposit agreement (each, a "Deposit
Agreement") among the Company, the depositary named therein (a "Preferred Stock
Depositary") and the holders from time to time of the Depositary Receipts.
Subject to the terms of the applicable Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest
of a share of a particular series of Preferred Stock represented by the
Depositary Shares evidenced by such Depositary Receipt, to all the rights and
preferences of the Preferred Stock represented by such Depositary Shares
(including distribution, voting, conversion, redemption and liquidation
rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Stock by the Company to a Preferred
Stock Depositary, the Company will cause such Preferred Stock Depositary to
issue, on behalf of the Company, the Depositary Receipts. Copies of the
applicable form of Deposit Agreement and Depositary Receipt may be obtained
from the Company upon request, and the statements made hereunder relating to
Deposit Agreements and the Depositary Receipts to be issued thereunder are
summaries of certain anticipated provisions thereof and do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all of the provisions of the applicable Deposit Agreement and related
Depositary Receipts.
DISTRIBUTIONS
A Preferred Stock Depositary will be required to distribute all cash
distributions received in respect of the applicable Preferred Stock to the
record holders of Depositary Receipts evidencing the related Depositary Shares
in proportion to the number of such Depositary Receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to such Preferred
Stock Depositary.
In the event of a distribution other than in cash, a Preferred Stock
Depositary will be required to distribute property received by it to the record
holders of Depositary Receipts entitled thereto, subject to certain obligations
of holders to file proofs, certificates and other information and to pay
certain charges and expenses to such Preferred Stock Depositary, unless such
Preferred Stock Depositary determines that it is not feasible to make such
distribution, in which case such Preferred Stock Depositary may, with the
approval of the Company, sell such property and distribute the net proceeds
from such sale to such holders.
No distribution will be made in respect of any Depositary Share to the
extent that it represents any Preferred Stock which has been converted or
exchanged.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office
of the applicable Preferred Stock Depositary (unless the related Depositary
Shares have previously been called for redemption or converted), the holders
thereof will be entitled to delivery at such office, to or upon each such
holder's order, of the number of whole or fractional shares of the applicable
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Preferred Stock and any money or other property represented by the Depositary
Shares evidenced by such Depositary Receipts. Holders of Depositary Receipts
will be entitled to receive whole or fractional shares of the related Preferred
Stock on the basis of the proportion of Preferred Stock represented by each
Depositary Share as specified in the applicable Prospectus Supplement, but
holders of such shares of Preferred Stock will not thereafter be entitled to
receive Depositary Shares therefor. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of shares of Preferred Stock to be
withdrawn, the applicable Preferred Stock Depositary will be required to
deliver to such holder at the same time a new Depositary Receipt evidencing
such excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems shares of Preferred Stock held by a
Preferred Stock Depositary, such Preferred Stock Depositary will be required to
redeem as of the same redemption date the number of Depositary Shares
representing shares of the Preferred Stock so redeemed, PROVIDED the Company
shall have paid in full to such Preferred Stock Depositary the redemption price
of the Preferred Stock to be redeemed plus an amount equal to any accrued and
unpaid distributions thereon to the date fixed for redemption. The redemption
price per Depositary Share will be equal to the redemption price and any other
amounts per share payable with respect to the Preferred Stock. If fewer than
all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected pro rata (as nearly as may be practicable without
creating fractional Depositary Shares) or by any other equitable method
determined by the Company that preserves the REIT status of the Company.
From and after the date fixed for redemption, all distributions in
respect of the shares of Preferred Stock so called for redemption will cease to
accrue, the Depositary Shares so called for redemption will no longer be deemed
to be outstanding and all rights of the holders of the Depositary Receipts
evidencing the Depositary Shares so called for redemption will cease, except
the right to receive any moneys payable upon such redemption and any money or
other property to which the holders of such Depositary Receipts were entitled
upon such redemption upon surrender thereof to the applicable Preferred Stock
Depositary.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the
applicable Preferred Stock are entitled to vote, a Preferred Stock Depositary
will be required to mail the information contained in such notice of meeting to
the record holders of the Depositary Receipts evidencing the Depositary Shares
which represent such Preferred Stock. Each record holder of Depositary
Receipts evidencing Depositary Shares on the record date (which will be the
same date as the record date for the Preferred Stock) will be entitled to
instruct such Preferred Stock Depositary as to the exercise of the voting
rights pertaining to the amount of Preferred Stock represented by such holder's
Depositary Shares. Such Preferred Stock Depositary will be required to vote
the amount of Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by such Preferred Stock
Depositary in order to enable such Preferred Stock Depositary to do so. Such
Preferred Stock Depositary will be required to abstain from voting the amount
of Preferred Stock represented by such Depositary Shares to the extent it does
not receive specific instructions from the holders of Depositary Receipts
evidencing such Depositary Shares. A Preferred Stock Depositary will not be
responsible for any failure to carry out any instruction to vote, or for the
manner or effect of any such vote made, as long as such action or non-action is
in good faith and does not result from negligence or willful misconduct of such
Preferred Stock Depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of each Depositary
Receipt will be entitled to the fraction of the liquidation preference accorded
each share of Preferred Stock represented by the Depositary Share evidenced by
such Depositary Receipt, as set forth in the applicable Prospectus Supplement.
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CONVERSION OF PREFERRED STOCK
The Depositary Shares, as such, will not be convertible into Common Stock
or any other securities or property of the Company. Nevertheless, if so
specified in the applicable Prospectus Supplement relating to an offering of
Depositary Shares, the Depositary Receipts may be surrendered by holders
thereof to the applicable Preferred Stock Depositary with written instructions
to such Preferred Stock Depositary to instruct the Company to cause conversion
of the Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipts into whole shares of Common Stock, other shares of
Preferred Stock of the Company or other shares of stock, and the Company will
agree that upon receipt of such instructions and any amounts payable in respect
thereof, it will cause the conversion thereof utilizing the same procedures as
those provided for delivery of Preferred Stock to effect such conversion. If
the Depositary Shares evidenced by a Depositary Receipt are to be converted in
part only, a new Depositary Receipt or Depositary Receipts will be issued for
any Depositary Shares not to be converted. No fractional shares of Common
Stock will be issued upon conversion, and if such conversion will result in a
fractional share being issued, an amount will be paid in cash by the Company
equal to the value of the fractional interest based upon the closing price of
the Common Stock on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
Any form of Depositary Receipt evidencing Depositary Shares which will
represent Preferred Stock and any provision of a Deposit Agreement will be
permitted at any time to be amended by agreement between the Company and the
applicable Preferred Stock Depositary. However, any amendment that materially
and adversely alters the rights of the holders of Depositary Receipts or that
would be materially and adversely inconsistent with the rights granted to the
holders of the related Preferred Stock will not be effective unless such
amendment has been approved by the existing holders of at least two-thirds of
the applicable Depositary Shares evidenced by the applicable Depositary
Receipts then outstanding. No amendment shall impair the right, subject to
certain anticipated exceptions in the Deposit Agreements, of any holders of
Depositary Receipts to surrender any Depositary Receipt with instructions to
deliver to the holder the related Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with any
applicable law. Every holder of an outstanding Depositary Receipt at the time
any such amendment becomes effective shall be deemed, by continuing to hold
such Depositary Receipt, to consent and agree to such amendment and to be bound
by the applicable Deposit Agreement as amended thereby.
A Deposit Agreement will be permitted to be terminated by the Company
upon not less than 30 days' prior written notice to the applicable Preferred
Stock Depositary if (i) such termination is necessary to preserve the Company's
status as a REIT or (ii) a majority of each series of Preferred Stock affected
by such termination consents to such termination, whereupon such Preferred
Stock Depositary will be required to deliver or make available to each holder
of Depositary Receipts, upon surrender of the Depositary Receipts held by such
holder, such number of whole or fractional shares of Preferred Stock as are
represented by the Depositary Shares evidenced by such Depositary Receipts
together with any other property held by such Preferred Stock Depositary with
receipts to such Depositary Receipts. The Company will agree that if a Deposit
Agreement is terminated to preserve the Company's status as a REIT, then the
Company will use its best efforts to list the Preferred Stock issued upon
surrender of the related Depositary Shares on a national securities exchange.
In addition, a Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares thereunder shall have been redeemed; (ii) there
shall have been a final distribution in respect of the related Preferred Stock
in connection with any liquidation, dissolution or winding up of the Company
and such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such Preferred Stock; or
(iii) each share of the related Preferred Stock shall have been converted into
stock of the Company not so represented by Depositary Shares.
CHARGES OF A PREFERRED STOCK DEPOSITARY
The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of a Deposit Agreement. In addition,
the Company will pay the fees and expenses of a Preferred Stock Depositary in
connection with the performance of its duties under a Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of a
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Preferred Stock Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the applicable
Deposit Agreement.
RESIGNATION AND REMOVAL OF A PREFERRED STOCK DEPOSITARY
A Preferred Stock Depositary will be permitted to resign at any time by
delivering to the Company notice of its election to do so, and the Company will
be permitted at any time to remove a Preferred Stock Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Preferred Stock Depositary. A successor Preferred Stock Depositary will be
required to be appointed within 60 days after delivery of the notice of
resignation or removal and will be required to be a bank or trust company
having its principal office in the United States and having a combined capital
and surplus of at least $50 million.
MISCELLANEOUS
A Preferred Stock Depositary will be required to forward to holders of
Depositary Receipts any reports and communications from the Company which are
received by such Preferred Stock Depositary with respect to the related
Preferred Stock.
Neither a Preferred Stock Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under a Deposit Agreement. The obligations
of the Company and a Preferred Stock Depositary under a Deposit Agreement will
be limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of Preferred
Stock represented by the applicable Depositary Shares), gross negligence or
willful misconduct, and neither the Company nor any applicable Preferred Stock
Depositary will be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Receipts, Depositary Shares or shares of Preferred
Stock represented thereby unless satisfactory indemnity is furnished. The
Company and any Preferred Stock Depositary will be permitted to rely on written
advice of counsel or accountants, or information provided by persons presenting
shares of Preferred Stock represented thereby for deposit, holders of
Depositary Receipts or other persons believed in good faith to be competent to
give such information, and on documents believed in good faith to be genuine
and signed by a proper party.
In the event a Preferred Stock Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on
the one hand, and the Company, on the other hand, such Preferred Stock
Depositary shall be entitled to act on such claims, requests or instructions
received from the Company.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued by the Operating Partnership. The Debt
Securities will be either (i) non-convertible investment grade Debt Securities
or (ii) non-convertible Debt Securities that are fully and unconditionally
guaranteed by, and are accompanied by Guarantees of, the Company. The Debt
Securities will be issued pursuant to an indenture (the "Indenture"), between
the Operating Partnership and a trustee (a "Trustee"). The form of Indenture
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part, subject to such amendments or supplements as may be
adopted from time to time and is available for inspection as described above
under "Available Information." The Indenture will be dated as of a date prior
to the issuance of the Debt Securities to which it relates. The Indenture is
subject to, and governed by, the Trust Indenture Act of 1939, as amended. The
statements made hereunder relating to the Indenture and the Debt Securities to
be issued thereunder are summaries of certain provisions thereof, do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indenture and such Debt Securities.
GENERAL
The Debt Securities will be direct, unsecured obligations of the
Operating Partnership and, unless subordinated (see "-Subordination" below),
will rank pari passu with all other unsecured and unsubordinated indebtedness
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of the Operating Partnership. The Debt Securities may be issued without limit
as to aggregate principal amount, in one or more series, in each case as
established from time to time, in or pursuant to authority granted by a
resolution of the Board of Directors of the Company (the "Board of Directors")
on behalf of the Operating Partnership or as established in one or more
indentures supplemental to the Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided in the
Indenture, a series may be reopened, without the consent of the holders of the
Debt Securities of such series, for issuances of additional Debt Securities of
such series.
The Indenture provides that the Operating Partnership may, but need not,
designate more than one Trustee thereunder, each with respect to one or more
series of Debt Securities. Any Trustee under the Indenture may resign or be
removed with respect to one or more series of Debt Securities, and a successor
Trustee may be appointed to act with respect to such series. In the event that
two or more persons are acting as Trustee with respect to different series of
Debt Securities, each such Trustee shall be a trustee of a trust under the
Indenture separate and apart from the trust administered by any other Trustee,
and, except as otherwise indicated herein, any action described herein to be
taken by the Trustee may be taken by each such Trustee with respect to, and
only with respect to, the one or more series of Debt Securities for which it is
Trustee under the Indenture.
The following summaries set forth certain general terms and provisions of
the Indenture and the Debt Securities. The Prospectus Supplement relating to
the series of Debt Securities being offered will contain further terms thereof
and of the Guarantees, if any, relating to such Debt Securities, including,
where applicable, the following:
(1) the title of such Debt Securities, whether such are senior Debt
Securities or subordinated Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon
declaration of acceleration of the maturity thereof;
(4) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(5) the rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) the date or dates, or the method for determining such date or
dates, from which any interest will accrue, the dates on which any
such interest will be payable, the record dates for such interest
payment dates, or the method by which any such date shall be
determined, and the basis upon which interest shall be calculated
if other than that of a 360-day year of 12 months consisting of 30
days each;
(7) the place or places where the principal of (and premium, if any)
and interest, if any, on such Debt Securities will be payable, such
Debt Securities may be surrendered for registration of transfer or
exchange and notices or demands to or upon the Operating
Partnership in respect of such Debt Securities, any applicable
Guarantees and the Indenture may be served;
(8) the period or periods within which, the price or prices at which
and the terms and conditions upon which such Debt Securities may be
redeemed, as a whole or in part, at the option of the Operating
Partnership, if the Operating Partnership is to have such an
option;
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(9) the obligation, if any, of the Operating Partnership to redeem,
repay or purchase such Debt Securities pursuant to any sinking fund
or analogous provision or at the option of a holder thereof, and
the period or periods within which, the price or prices at which
and the terms and conditions upon which such Debt Securities will
be redeemed, repaid or purchased, as a whole or in part, pursuant
to such obligation;
(10) if other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a
foreign currency or units of two or more foreign currencies or a
composite currency or currencies, and the terms and conditions
relating thereto;
(11) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such Debt Securities may be determined
with reference to an index, formula or other method (which index,
formula or method may, but need not be, based on a currency,
currencies, currency unit or units or composite currency or
currencies) and the manner in which such amounts shall be
determined;
(12) the events of default or covenants of such Debt Securities, to the
extent different from or in addition to those described herein;
(13) whether such Debt Securities will be issued in certificated and/or
book-entry form;
(14) whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than
$1,000 and any integral multiple thereof and, if in bearer form,
the denominations thereof if other than $5,000 and terms and
conditions relating thereto;
(15) the applicability, if any, of the defeasance and covenant
defeasance provisions described herein or any modification thereof;
(16) if such Debt Securities are to be issued upon the exercise of debt
warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;
(17) the terms and conditions, if any, upon which such Debt Securities
may be subordinated to other indebtedness of the Operating
Partnership;
(18) whether and under what circumstances the Operating Partnership will
pay additional amounts on such Debt Securities in respect of any
tax, assessment or governmental charge and, if so, whether the
Operating Partnership will have the option to redeem such Debt
Securities in lieu of making such payment;
(19) with respect to any Debt Securities that provide for optional
redemption or prepayment upon the occurrence of certain events
(such as a change of control of the Operating Partnership), (i) the
possible effects of such provisions on the market price of the
Operating Partnership's or the Company's securities or in deterring
certain mergers, tender offers or other takeover attempts, and the
intention of the Operating Partnership to comply with the
requirements of Rule 14e-1 under the Exchange Act; (ii) whether the
occurrence of the specified events may give rise to cross-defaults
on other indebtedness such that payment on such Debt Securities may
be effectively subordinated; and (iii) the existence of any
limitation on the Operating Partnership's financial or legal
ability to repurchase such Debt Securities upon the occurrence of
such an event (including, if true, the lack of assurance that such
a repurchase can be effected) and the impact, if any, under the
Indenture of such a failure, including whether and under what
circumstances such a failure may constitute an Event of Default;
and
(20) any other terms of such Debt Securities or of any Guarantees issued
concurrently with such Debt Securities not inconsistent with the
provisions of the Indenture.
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The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). If material or applicable, the federal
income tax, accounting and other considerations applicable to Original Issue
Discount Securities will be described in the applicable Prospectus Supplement.
Except as described under "-Merger, Consolidation or Sale" or as may be
set forth in any Prospectus Supplement, the Indenture does not contain any
other provisions that would limit the ability of the Operating Partnership to
incur indebtedness or that would afford holders of the Debt Securities
protection in the event of (i) a highly leveraged or similar transaction
involving the Operating Partnership, the management of the Operating
Partnership or any affiliate of any such party, (ii) a change of control or
(iii) a reorganization, restructuring, merger or similar transaction involving
the Operating Partnership that may adversely affect the holders of the Debt
Securities. In addition, subject to the limitations set forth under "-Merger,
Consolidation or Sale," the Operating Partnership may, in the future, enter
into certain transactions, such as the sale of all or substantially all of its
assets or the merger or consolidation of the Operating Partnership that would
increase the amount of the Operating Partnership's indebtedness or
substantially reduce or eliminate the Operating Partnership's assets, which may
have an adverse effect on the Operating Partnership's ability to service its
indebtedness, including the Debt Securities. In addition, restrictions on
ownership and transfers of the Company's capital stock are designed to preserve
its status as a REIT and, therefore, may act to prevent or hinder a change of
control. See "Description of Common Stock" and "Description of Preferred
Stock." Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions
to the events of default or covenants that are described below, including any
addition of a covenant or other provisions providing event risk or similar
protection.
Reference is made to "-Certain Covenants" below and to the description of
any additional covenants with respect to a series of Debt Securities in the
applicable Prospectus Supplement. Except as otherwise described in the
applicable Prospectus Supplement, compliance with such covenants generally may
not be waived with respect to a series of Debt Securities by the Board of
Directors on behalf of the Operating Partnership or by the Trustee unless the
holders of at least a majority in principal amount of all outstanding Debt
Securities of such series consent to such waiver, except to the extent that the
defeasance and covenant defeasance provisions of the Indenture described under
"-Discharge, Defeasance and Covenant Defeasance" below apply to such series of
Debt Securities. See "-Modification of the Indenture."
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series which are registered securities, other than
registered securities issued in global form (which may be of any denomination),
shall be issuable in denominations of $1,000 and any integral multiple thereof
and the Debt Securities which are bearer securities, other than bearer
securities issued in global form (which may be of any denomination), shall be
issuable in denominations of $5,000.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest, if any, on any series of Debt
Securities will be payable at the corporate trust office of the Trustee,
initially at the address which will be set forth in the applicable Prospectus
Supplement, PROVIDED that, at the option of the Operating Partnership payment
of interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register or by wire transfer of funds
to such person at an account maintained within the United States.
Any interest not punctually paid or duly provided for on any interest
payment date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the holder on the applicable regular record
date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
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Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Trustee. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer thereof at the corporate trust office of the
applicable Trustee. Every Debt Security surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer. No service charge will be made for any registration of
transfer or exchange of any Debt Securities, but the Trustee or the Operating
Partnership may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. If the applicable
Prospectus Supplement refers to any transfer agent (in addition to the Trustee)
initially designated by the Operating Partnership with respect to any series of
Debt Securities, the Operating Partnership may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Operating
Partnership will be required to maintain a transfer agent in each place of
payment for such series. The Operating Partnership may at any time designate
additional transfer agents with respect to any series of Debt Securities.
Neither the Operating Partnership nor any Trustee shall be required (i)
to issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before any
selection of Debt Securities of that series to be redeemed and ending at the
close of business on (a) if such Debt Securities are issuable only as
registered securities, the day of the mailing of the relevant notice of
redemption and (b) if such Debt Securities are issuable as bearer securities,
the day of the first publication of the relevant notice of redemption or, if
such Debt Securities are also issuable as registered securities and there is no
publication, the day of the mailing of the relevant notice of redemption,
(ii) to register the transfer or exchange of any registered security to be
redeemed in whole or in part, except, in the case of any registered security to
be redeemed in part, the portion thereof not to be redeemed, (iii) to exchange
any bearer security so selected for redemption except that such a bearer
security may be exchanged for a registered security of that series and like
tenor, PROVIDED that such registered security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Debt Security which has been surrendered for repayment at the
option of the holder, except the portion, if any, of such Debt Security not to
be so repaid.
MERGER, CONSOLIDATION OR SALE
The Operating Partnership may consolidate with, or sell, lease or convey
all or substantially all of its assets to, or merge with or into, any other
entity, PROVIDED that (i) either the Operating Partnership shall be the
continuing entity or the successor entity (if other than the Operating
Partnership) formed by or resulting from any such consolidation or merger or
which shall have received the transfer of such assets shall expressly assume
payment of the principal of (and premium, if any) and interest, if any, on all
of the Debt Securities and the due and punctual performance and observance of
all of the covenants and conditions contained in the Indenture;
(ii) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Operating Partnership or any
subsidiary as a result thereof as having been incurred by the Operating
Partnership or such subsidiary at the time of such transaction, no Event of
Default under the Indenture, and no event which, after notice or the lapse of
time, or both, would become such an Event of Default, shall have occurred and
be continuing; and (iii) an officer's certificate and legal opinion covering
such conditions shall be delivered to the Trustee.
CERTAIN COVENANTS
EXISTENCE. Except as permitted under "-Merger, Consolidation or Sale,"
the Operating Partnership will be required to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
and franchises; PROVIDED, HOWEVER, that the Operating Partnership shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
holders of the Debt Securities.
PAYMENT OF TAXES AND OTHER CLAIMS. The Operating Partnership is required
to pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges levied
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or imposed upon it or any subsidiary or upon the income, profits or property of
the Operating Partnership or any subsidiary and (ii) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a lien upon
the property of the Operating Partnership or any subsidiary; PROVIDED, HOWEVER,
that the Operating Partnership shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
ADDITIONAL COVENANTS. Any additional or different covenants of the
Operating Partnership with respect to any series of Debt Securities will be set
forth in the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (i) default
for 30 days in the payment of any installment of interest on any Debt Security
of such series; (ii) default in the payment of the principal of (or premium, if
any, on) any Debt Security of such series at its maturity; (iii) default in
making any sinking fund payment as required for any Debt Security of such
series; (iv) default in the performance of any other covenant of the Operating
Partnership contained in the Indenture (other than a covenant added to such
Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series), such default having continued for 60 days
after written notice as provided in such Indenture; (v) default in the payment
of an aggregate principal amount exceeding a specified dollar amount of any
evidence of recourse indebtedness of the Operating Partnership or any mortgage,
indenture or other instrument under which such indebtedness is issued or by
which such indebtedness is secured, such default having occurred after the
expiration of any applicable grace period and having resulted in the
acceleration of the maturity of such indebtedness, but only if such
indebtedness is not discharged or such acceleration is not rescinded or
annulled; (vi) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the Operating
Partnership or any Significant Subsidiary (as hereinafter defined) or any of
their respective property; and (vii) any other Event of Default provided with
respect to a particular series of Debt Securities. The term "Significant
Subsidiary" means each significant subsidiary (as defined in Regulation S-X
promulgated under the Securities Act) of the Operating Partnership.
If an Event of Default under the Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the applicable Trustee or the holders of not less than 25%
in principal amount of the outstanding Debt Securities of that series may
declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities or indexed securities, such portion of the
principal amount as may be specified in the terms thereof) of all of the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Operating Partnership (and to the applicable Trustee if given by
the holders). However, at any time after such a declaration of acceleration
with respect to Debt Securities of such series (or of all Debt Securities then
outstanding under the Indenture, as the case may be) has been made, but before
a judgment or decree for payment of the money due has been obtained by the
applicable Trustee, the holders of not less than a majority in principal amount
of outstanding Debt Securities of such series (or of all Debt Securities then
outstanding under the Indenture, as the case may be) may rescind and annul such
declaration and its consequences if (i) the Operating Partnership shall have
deposited with the applicable Trustee all required payments of the principal of
(and premium, if any) and interest, if any, on the Debt Securities of such
series (or of all Debt Securities then outstanding under the Indenture, as the
case may be), plus certain fees, expenses, disbursements and advances of the
applicable Trustee and (ii) all events of default, other than the non-payment
of accelerated principal (or specified portion thereof), or premium (if any) or
interest on the Debt Securities of such series (or of all Debt Securities then
outstanding under the Indenture, as the case may be) have been cured or waived
as provided in the Indenture. The Indenture also provides that the holders of
not less than a majority in principal amount of the outstanding Debt Securities
of any series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be) may waive any past default with respect to such
series and its consequences, except a default (i) in the payment of the
principal of (or premium, if any) or interest, if any, on any Debt Security of
such series or (ii) in respect of a covenant or provision contained in the
Indenture that cannot be modified or amended without the consent of the holder
of each outstanding Debt Security affected thereby.
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The Trustee will be required to give notice to the holders of Debt
Securities within 90 days of a default under the Indenture unless such default
has been cured or waived; PROVIDED, HOWEVER, that such Trustee may withhold
notice to the holders of any series of Debt Securities of any default with
respect to such series (except a default in the payment of the principal of (or
premium, if any) or interest, if any, on any Debt Security of such series or in
the payment of any sinking fund installment in respect of any Debt Security of
such series) if specified responsible officers of such Trustee consider such
withholding to be in the interest of such holders.
The Indenture provides that no holders of Debt Securities of any series
may institute any proceedings, judicial or otherwise, with respect to such
Indenture or for any remedy thereunder, except in the case of failure of the
applicable Trustee, for 60 days, to act after it has received a written request
to institute proceedings in respect of an Event of Default from the holders of
not less than 25% in principal amount of the outstanding Debt Securities of
such series, as well as an offer of indemnity reasonably satisfactory to it.
This provision will not prevent, however, any holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest, if any, on such Debt Securities at the
respective due dates thereof.
Subject to provisions in the Indenture relating to its duties in case of
default, no Trustee will be under any obligation to exercise any of its rights
or powers under the Indenture at the request or direction of any holders of any
series of Debt Securities then outstanding under such Indenture, unless such
holders shall have offered to the Trustee reasonable security or indemnity.
The holders of not less than a majority in principal amount of the outstanding
Debt Securities of any series (or of all Debt Securities then outstanding under
the Indenture, as the case may be) shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
applicable Trustee, or of exercising any trust or power conferred upon such
Trustee. However, a Trustee may refuse to follow any direction which is in
conflict with any law or the Indenture, which may involve such Trustee in
personal liability or which may be unduly prejudicial to the holders of Debt
Securities of such series not joining therein.
Within 120 days after the close of each fiscal year, the Operating
Partnership will be required to deliver to each Trustee a certificate, signed
by one of several specified officers of the Company, stating whether or not
such officer has knowledge of any default under the Indenture and, if so,
specifying each such default and the nature and status thereof.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture will be permitted to be
made only with the consent of the holders of not less than a majority in
principal amount of all outstanding Debt Securities or series of outstanding
Debt Securities which are affected by such modification or amendment; PROVIDED,
HOWEVER, that no such modification or amendment may, without the consent of the
holder of each such Debt Security affected thereby, (i) change the stated
maturity of the principal of, or any installment of interest (or premium, if
any) on, any such Debt Security; (ii) reduce the principal amount of, or the
rate or amount of interest on, or any premium payable on redemption of, any
such Debt Security, or reduce the amount of principal of an Original Issue
Discount Security that would be due and payable upon declaration of
acceleration of the maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the holder of any such Debt
Security; (iii) change the place of payment, or the coin or currency, for
payment of principal of, premium, if any, or interest on any such Debt
Security; (iv) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security; (v) reduce the above-
stated percentage of outstanding Debt Securities of any series necessary to
modify or amend the Indenture, to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder or to reduce the quorum
or voting requirements set forth in such Indenture; or (vi) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the holder of such Debt Security.
The Indenture provides that the holders of not less than a majority in
principal amount of a series of outstanding Debt Securities have the right to
waive compliance by the Operating Partnership with certain covenants relating
to such series of Debt Securities in the Indenture.
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Modifications and amendments of the Indenture will be permitted to be
made by the Operating Partnership and the respective Trustee thereunder without
the consent of any holder of Debt Securities for any of the following purposes:
(i) to evidence the succession of another person to the Operating Partnership
as obligor under such Indenture; (ii) to add to the covenants of the Operating
Partnership for the benefit of the holders of all or any series of Debt
Securities or to surrender any right or power conferred upon the Operating
Partnership in such Indenture; (iii) to add events of default for the benefit
of the holders of all or any series of Debt Securities; (iv) to add or change
any provisions of such Indenture to facilitate the issuance of Debt Securities
in uncertificated form, PROVIDED that such action shall not adversely affect
the interests of the holders of the Debt Securities in any material respect;
(v) to change or eliminate any provisions of such Indenture, PROVIDED that any
such change or elimination shall become effective only when there are no Debt
Securities outstanding of any series created prior thereto which are entitled
to the benefit of such provision; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series; (viii) to provide
for the acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under such Indenture by more than one Trustee;
(ix) to cure any ambiguity, defect or inconsistency in such Indenture, PROVIDED
that such action shall not adversely affect the interests of holders of Debt
Securities of any series in any material respect; or (x) to supplement any of
the provisions of such Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt Securities or of
any applicable Guarantees, PROVIDED that such action shall not adversely affect
the interests of the holders of the Debt Securities of any series in any
material respect.
The Indenture provides that in determining whether the holders of the
requisite principal amount of outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a foreign currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above), (iii) the
principal amount of an indexed security that shall be deemed outstanding shall
be the principal face amount of such indexed security at original issuance,
unless otherwise provided with respect to such indexed security pursuant to
such Indenture, and (iv) Debt Securities owned by the Operating Partnership or
any other obligor upon the Debt Securities or any affiliate of the Operating
Partnership or of such other obligor shall be disregarded.
The Indenture contains provisions for convening meetings of the holders
of Debt Securities of a series. A meeting will be permitted to be called at
any time by a Trustee, and also, upon request, by the Operating Partnership or
the holders of at least 10% in principal amount of the outstanding Debt
Securities of such series, in any such case, upon notice given as provided in
such Indenture. Except for any consent that must be given by the holder of
each Debt Security affected by certain modifications and amendments of the
Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; PROVIDED, HOWEVER, that, except as referred to
above, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the holders of a specified percentage, which is less than a majority,
in principal amount of the outstanding Debt Securities of a series may be
adopted at a meeting or adjourned meeting duly reconvened at which a quorum is
present by the affirmative vote of the holders of such specified percentage in
principal amount of the outstanding Debt Securities for that series. Any
resolution passed or decision taken at any meeting of holders of Debt
Securities of any series duly held in accordance with the Indenture will be
binding on all holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
outstanding Debt Securities of a series; PROVIDED, HOWEVER, that if any action
is to be taken at such meeting with respect to a consent or waiver which may be
given by the holders of not less than a specified percentage in principal
amount of the outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the outstanding
Debt Securities of such series will constitute a quorum.
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Notwithstanding the foregoing provisions, the Indenture provides that if
any action is to be taken at a meeting of holders of Debt Securities of any
series with respect to any request, demand, authorization, direction, notice,
consent, waiver or other action that such Indenture expressly provides may be
made, given or taken by the holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the outstanding Debt Securities of such series
that vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent, waiver
or other action has been made, given or taken under such Indenture.
SUBORDINATION
The terms and conditions, if any, upon which the Debt Securities are
subordinated to other indebtedness of the Operating Partnership will be set
forth in the applicable Prospectus Supplement relating thereto. Such terms
will include a description of the indebtedness ranking senior to the Debt
Securities, the restrictions on payments to the holders of such Debt Securities
while default with respect to such senior indebtedness is continuing, the
restrictions, if any, on payments to the holders of such Debt Securities
following an Event of Default, and provisions requiring holders of such Debt
Securities to remit certain payments to holders of senior indebtedness. If
this Prospectus is being delivered in connection with a series of Debt
Securities, which by its terms are subordinated to other indebtedness of the
Operating Partnership, the applicable Prospectus Supplement or the information
incorporated herein by reference will set forth the approximate amount of such
other indebtedness outstanding at the end of the Operating Partnership's most
recent fiscal quarter. If the applicable Prospectus Supplement relates to Debt
Securities that are guaranteed by the Company, the terms and conditions, if
any, upon which such guarantee may be subordinated to other indebtedness of the
Company will also be set forth.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Operating Partnership may discharge certain obligations to holders of
any series of Debt Securities that have not already been delivered to the
applicable Trustee for cancellation and that either have become due and payable
or will become due and payable within one year (or scheduled for redemption
within one year) by irrevocably depositing with such Trustee, in trust, funds
in such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal
(and premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or redemption
date, as the case may be.
The Indenture provides that, if certain provisions thereof are made
applicable to the Debt Securities of or within a series pursuant to such
Indenture, the Operating Partnership may elect either (i) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay additional amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or
agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") or (ii) to be released from its obligations with respect
to such Debt Securities under certain sections of such Indenture (including the
restrictions described under "-Certain Covenants") and, if provided pursuant to
such Indenture, its obligations with respect to any other covenant, and any
omission to comply with such obligations shall not constitute a default or an
Event of Default with respect to such Debt Securities ("covenant defeasance"),
in either case upon the irrevocable deposit by the Operating Partnership with
the applicable Trustee, in trust, of an amount, in such currency or currencies,
currency unit or units of composite currency or currencies in which such Debt
Securities are payable at stated maturity, or Government Obligations (as
defined below), or both, applicable to such Debt Securities which through the
scheduled payment of principal and interest in accordance with their terms will
provide money in an amount sufficient to pay the principal of (and premium, if
any) and interest on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled dates therefor.
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Such a trust will only be permitted to be established if, among other
things, the Operating Partnership has delivered to the Trustee an opinion of
counsel (as specified in the Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such opinion of counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service ("IRS") or a change in applicable federal income tax law occurring
after the date of the Indenture.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or
(ii) obligations of a person controlled or supervised by and acting as an
agency or instrumentality of the United States of America or such government
which issued the foreign currency in which the Debt Securities of a particular
series are payable, the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America or such other
government, which, in either case, are not callable or redeemable at the option
of the issuer thereof, and shall also include a depository receipt issued by a
bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of any such
Government Obligation held by such custodian for the account of the holder of a
depository receipt, PROVIDED that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Obligations or the specific payment of interest on or principal
of the Government Obligations evidenced by such depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Operating Partnership has deposited funds and/or Government
Obligations to effect defeasance or covenant defeasance with respect to Debt
Securities of any series, (i) the holder of a Debt Security of such series is
entitled to, and does, elect pursuant to the Indenture or the terms of such
Debt Security to receive payment in a currency, currency unit or composite
currency other than that in which such deposit has been made in respect of such
Debt Security, or (ii) a Conversion Event (as defined below) occurs in respect
of the currency, currency unit or composite currency in which such deposit has
been made, the indebtedness represented by such Debt Security shall be deemed
to have been, and will be, fully discharged and satisfied through the payment
of the principal of (and premium, if any) and interest, if any, on such Debt
Security as they become due out of the proceeds yielded by converting the
amount so deposited in respect of such Debt Security into the currency,
currency unit or composite currency in which such Debt Security becomes payable
as a result of such election or such Conversion Event based on the applicable
market exchange rate. "Conversion Event" means the cessation of use of (i) a
currency, currency unit or composite currency both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international
banking community, (ii) the European Currency Unit (the "ECU") both within the
European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities or (iii) any currency unit
or composite currency other than the ECU for the purposes for which it was
established. Unless otherwise provided in the applicable Prospectus
Supplement, all payments of principal of (and premium, if any) and interest, if
any, on any Debt Security that is payable in a foreign currency that ceases to
be used by its government of issuance shall be made in U.S. dollars.
In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (iv) under "-Events of Default, Notice and
Waiver" with respect to certain sections of the Indenture (which sections would
no longer be applicable to such Debt Securities) or described in clause (vii)
under "-Events of Default, Notice and Waiver" with respect to any other
covenant as to which there has been covenant defeasance, the amount in such
currency, currency unit or composite currency in which such Debt Securities are
payable, and Government Obligations on deposit with the applicable Trustee,
will be sufficient to pay amounts due on such Debt Securities at the time of
their stated maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of
Default. However, the Operating Partnership would remain liable to make
payment of such amounts due at the time of acceleration.
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The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
GUARANTEES
If the Operating Partnership issues any Debt Securities that are rated
below investment grade at the time of issuance, the Company will fully and
unconditionally guarantee, on a senior or subordinated basis, the due and
punctual payment of principal of or premium, if any, and interest on such Debt
Securities, and the due and punctual payment of any sinking fund payments
thereon, when and as the same shall become due and payable, whether at a
maturity date, by declaration of acceleration, call for redemption or
otherwise. See "-Subordination." The applicability and terms of any such
Guarantees relating to a series of Debt Securities will be set forth in the
Prospectus Supplement relating to such Debt Securities.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary identified in the applicable
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such series.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding Equity Stock may be owned,
directly or indirectly, by five or fewer individuals (defined in the Code to
include certain entities) during the last half of a taxable year (other than
the first year), and such Equity Stock must be beneficially owned by 100 or
more persons during at least 335 days of a taxable year of 12 months (other
than the first year) or during a proportionate part of a shorter taxable year.
The Charter provides that, subject to certain exceptions specified in the
Charter, no stockholder may own, or be deemed to own by virtue of the
attribution provisions of the Code (or by virtue of being deemed part of a
"group" within the meaning of Section 13(d)(3) of the Exchange Act), more than
5% of the number or value of the issued and outstanding shares of the Company
(the "Ownership Limit"). The Board of Directors may waive the Ownership Limit
if evidence satisfactory to the Board of Directors is presented that such
Ownership Limit will not jeopardize the Company's status as a REIT. As a
condition to such waiver, the Board of Directors may require opinions of
counsel satisfactory to it and undertakings from the applicant with respect to
preserving the REIT status of the Company. The Ownership Limit will not apply
if the Board of Directors and the stockholders of the Company determine that it
is no longer in the best interests of the Company to attempt to qualify, or to
continue to qualify, as a REIT.
If shares of Equity Stock in excess of the Ownership Limit, or shares
which would cause the Company to be beneficially owned by fewer than 100
persons or cause the Company to become "closely held" under Section 856(h) of
the Code, are issued or transferred to any person, such issuance or transfer
shall be null and void and the intended transferee will acquire no rights to
the Equity Stock. Shares issued or transferred that would cause any
stockholder to own more than the Ownership Limit or cause the Company to become
"closely held" under Section 856(h) of the Code will be exchanged automatically
for shares of Excess Stock. All Excess Stock will be transferred, without
action by the stockholder, to the Company as trustee of a trust for the
exclusive benefit of the transferee or transferees to whom the Excess Stock is
ultimately transferred. While the Excess Stock is held in trust, it will not
be entitled to vote, it will not be considered for purposes of any stockholder
vote or the determination of a quorum for such vote and it will not be entitled
to participate in any distributions made by the Company, except upon
liquidation. The intended transferee (provided he does not make a profit from
the transfer) may, at any time the Excess Stock is held by the Company in
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trust, transfer the Excess Stock to any individual whose ownership of such
Excess Stock would be permitted under the Ownership Limit provision and would
not cause the Company to be beneficially owned by fewer than 100 persons or
cause the Company to become to become "closely held" under Section 856(h) of
the Code, at which time the Excess Stock would automatically be exchanged for
Common Stock. In addition, the Company has the right, for a period of 90 days,
beginning on the later of the date of the transfer that caused the exchange for
Excess Stock and the date the Board has knowledge of the transfer, to purchase
all or any portion of the Excess Stock from the intended transferee at the
lesser of the price paid for the Equity Stock by the intended transferee and
the closing market price for the Equity Stock on the date the Company exercises
its option to purchase.
The Charter provides that these restrictions will not preclude the
settlement of transactions entered into through the facilities of the NYSE.
Each stockholder who owns, directly or by virtue of the attribution
provisions of the Code, more than 5% of the outstanding Equity Stock (or 1% if
there are fewer than 2,000 stockholders) must give written notice to the
Company containing the information specified in the Charter within 30 days
after January 1 of each year. In addition, each stockholder shall, upon
demand, be required to disclose to the Company in writing such information with
respect to the direct, indirect and constructive ownership of beneficial
interests as the Board of Directors deems necessary to comply with the
provisions of the Code applicable to REITs, to comply with the requirements of
any taxing authority or governmental agency or to determine any such
compliance.
The Charter excludes from the Ownership Limit the Price Group, which
would exceed the Ownership Limit as a result of the exchange of its PDC Units
for Common Stock. Some members of the Price Group may also acquire additional
shares of Common Stock through the Company's 1993 Stock Option Plan, but in no
event will such persons be entitled to acquire additional shares such that the
five largest beneficial owners of the Company's shares of Equity Stock hold
more than 50% of the total outstanding shares of Equity Stock.
In addition to preserving the Company's status as a REIT, the Ownership
Limit may have the effect of precluding an acquisition of control of the
Company without the approval of the Board of Directors.
PLAN OF DISTRIBUTION
The Company and/or the Operating Partnership, as the case may be, may
sell the Offered Securities through underwriters or dealers, directly to one or
more purchasers (including executive officers of the Company or other persons
that may be deemed affiliates of the Company), through agents or through a
combination of any such methods of sale. Any underwriter involved in the offer
and sale of the Offered Securities will be named in the applicable Prospectus
Supplement.
The distribution of the Common Stock by the Company may be effected from
time to time in one or more transactions (which may involve block transactions)
on the NYSE or otherwise pursuant to and in accordance with the applicable
rules of the NYSE, in the over-the-counter market, in negotiated transactions,
through the writing of Common Stock Warrants or through the issuance of
Preferred Stock convertible into Common Stock (whether such Common Stock
Warrants or Preferred Stock is listed on a securities exchange or otherwise),
or a combination of such methods of distribution, at market prices prevailing
at the time of the sale, at prices related to such prevailing market prices or
at negotiated prices.
In connection with the sale of the Offered Securities, underwriters or
agents may receive compensation from the Company or the Operating Partnership
or from purchasers of the Offered Securities, for whom they may act as agents
in the form of discounts, concessions or commissions. Underwriters may sell
the Offered Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution
of the Offered Securities may be deemed to be underwriters under the Securities
Act, and any discounts or commissions they receive from the Company or the
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Operating Partnership and any profit on the resale of the Offered Securities
they realize may be deemed to be underwriting discounts and commissions under
the Securities Act. Any such underwriter or agent will be identified, and any
such compensation received from the Company or the Operating Partnership will
be described, in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, each
series of the Offered Securities will be a new issue with no established
trading market, other than the Common Stock which is listed on the NYSE. Any
shares of Common Stock sold pursuant to a Prospectus Supplement will be listed
on the NYSE, subject to official notice of issuance. The Company or the
Operating Partnership, as the case may be, may elect to list any series of
Preferred Stock on an exchange, but is not obligated to do so. It is possible
that one or more underwriters may make a market in a series of the Offered
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. Therefore, no assurance can be given as to
the liquidity of, or the trading market for, the Offered Securities.
Under agreements into which the Company or the Operating Partnership may
enter, underwriters, dealers and agents who participate in the distribution of
the Offered Securities may be entitled to indemnification by the Company or the
Operating Partnership against certain liabilities, including liabilities under
the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be tenants of, the Company or the Operating
Partnership in the ordinary course of business.
In order to comply with the securities laws of certain states, if
applicable, the Offered Securities will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the Offered Securities may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Offered Securities may not simultaneously
engage in market making activities with respect to the Offered Securities for a
period of two business days prior to the commencement of such distribution.
FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following summary of material federal income tax considerations
relevant to the Company is based on current law, and is not intended as tax
advice. The following discussion, which is not exhaustive of all possible tax
considerations, does not include a detailed discussion of any state, local or
foreign tax considerations. Nor does it discuss all of the aspects of federal
income taxation that may be relevant to a prospective holder of Offered
Securities in light of his or her particular circumstances or to certain types
of stockholders (including insurance companies, tax-exempt entities, financial
institutions or broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) who are subject to special
treatment under the federal income tax laws. The tax treatment of a holder of
any Offered Securities will also vary depending upon the terms of the specific
securities acquired by such holder. Additional federal income tax
considerations relevant to holders of the Offered Securities other than Common
Stock may be provided in the applicable Prospectus Supplement relating thereto.
EACH PROSPECTIVE PURCHASER OF COMMON STOCK IS ADVISED TO CONSULT WITH HIS
OR HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF
THE PURCHASE, OWNERSHIP AND SALE OF COMMON STOCK IN AN ENTITY ELECTING TO BE
TAXED AS A REIT, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION, AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.
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TAXATION OF THE COMPANY
GENERAL. The Company elected to be taxed as a REIT under Sections 856
through 860 of the Code, effective for its taxable year ended December 31,
1994. The Company believes that it was organized and has operated in such a
manner so as to qualify for taxation as a REIT under the Code, and the Company
intends to continue to operate in such a manner. No assurance, however, can be
given that the Company has operated in a manner so as to qualify, or will
continue to operate in a manner so as to qualify, as a REIT. Qualification and
taxation as a REIT depend upon the Company's ability to meet, on a continuing
basis, through actual annual operating results, distribution levels, diversity
of stock ownership, and the various other qualification tests imposed under the
Code on REITs, some of which are summarized below. While the Company intends
to operate so that it will qualify as a REIT, given the highly complex nature
of the rules governing REITs, the ongoing importance of factual determinations
and the possibility of future changes in circumstances of the Company, no
assurance can be given that the Company has qualified or will so qualify for
any particular year. See "-Failure to Qualify."
Prior to the issuance of any of the Offered Securities, Rogers & Wells,
counsel to the Company ("Counsel"), will render an opinion to the effect that
commencing with its taxable year ended December 31, 1994, the Company was
organized in conformity with the requirements for qualification as a REIT under
the Code, and the proposed method of operation of the Company, the Operating
Partnership and its financing subsidiary (the "Financing Partnership") will
enable the Company to continue to so qualify. It must be emphasized that
Counsel's opinion is based on various assumptions and is conditioned upon
certain representations made by the Company, the Operating Partnership and
Financing Partnership as to factual matters. In addition, Counsel's opinion is
based upon factual representations of the Company concerning its business and
properties, and the business and properties of the Operating Partnership and
the Financing Partnership. Unlike a tax ruling, an opinion of counsel is not
binding upon the Internal Revenue Service ("IRS") and no assurance can be given
that the IRS will not challenge the status of the Company as a REIT. Moreover,
such qualification and taxation as a REIT depend upon the Company's ability to
meet, through actual annual operating results, distribution levels, diversity
of stock ownership and various other qualification tests imposed under the Code
discussed below, the results of which will not be reviewed by Counsel.
Accordingly, no assurance can be given that the actual results of the Company's
operation for any one taxable year will satisfy such requirements. See
"-Failure to Qualify."
As a REIT, the Company generally is not subject to federal corporate
income taxes on net income that it distributes currently to stockholders.
However, the Company will be subject to federal income or excise tax as
follows: (i) the Company will be taxed at regular corporate rates on any
undistributed REIT taxable income and undistributed net capital gains; (ii)
under certain circumstances, the Company may be subject to the "alternative
minimum tax" on its items of tax preference, if any; (iii) if the Company has
(1) net income from the sale or other disposition of "foreclosure property"
(generally, property acquired by reason of a foreclosure or otherwise on
default of a loan secured by the property) that is held primarily for sale to
customers in the ordinary course of business or (2) other nonqualifying net
income from foreclosure property, it will be subject to tax at the highest
corporate rate on such income; (iv) if the Company has net income from
prohibited transactions (which are, in general, certain sales or other
dispositions of property (other than dispositions of foreclosure property, and,
as a result of the Taxpayer Relief Act of 1997, enacted August 5, 1997 (the
"Taxpayer Relief Act"), effective for the Company's taxable year ending
December 31, 1998, dispositions of property that occur due to involuntary
conversion) held primarily for sale to customers in the ordinary course of
business), such income will be subject to a 100% tax; (v) if the Company should
fail to satisfy the 75% gross income test or the 95% gross income test (as
discussed below), and has nonetheless maintained its qualification as a REIT
because certain other requirements have been met, it will be subject to a 100%
tax on the net income attributable to the greater of the amount by which the
Company fails the 75% or 95% test, multiplied by a fraction intended to reflect
the Company's profitability; (vi) if the Company should fail to distribute with
respect to each calendar year at least the sum of (1) 85% of its REIT ordinary
income for such year, (2) 95% of its REIT capital gain net income for such
year, and (3) any undistributed taxable income from prior years, the Company
would be subject to a 4% excise tax on the excess of such required distribution
over the amounts actually distributed; (vii) if the Company acquires any asset
from a C corporation (I.E., generally a corporation subject to full corporate-
level tax) in a transaction in which the basis of the asset in the Company's
hands is determined by reference to the basis of the asset (or any other
property) in the hands of the C corporation and the Company subsequently
recognizes gain on the disposition of such asset during the 10-year period (the
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<PAGE>
"Recognition Period") beginning on the date on which the asset was acquired by
the Company (or the Company first qualified as a REIT), then the excess of (1)
the fair market value of the asset as of the beginning of the applicable
Recognition Period, over (2) the REIT's adjusted basis in such asset as of the
beginning of such Recognition Period will be subject to tax at the highest
regular corporate rate (pursuant to Treasury Regulations issued by the IRS
which have not yet been promulgated).
The following is a general summary of the Code provisions that govern the
federal income tax treatment of a REIT and its stockholders. These provisions
of the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, Treasury Regulations and
administrative and judicial interpretations thereof.
REQUIREMENTS FOR QUALIFICATION. The Code defines a REIT as a
corporation, trust or association (1) that is managed by one or more trustees
or directors; (2) the beneficial ownership of which is evidenced by
transferable common stock, or by transferable certificates of beneficial
interest; (3) that would be taxable as a domestic corporation but for Sections
856 through 859 of the Code; (4) that is neither a financial institution nor an
insurance company subject to certain provisions of the Code; (5) that has the
calendar year as its taxable year; (6) the beneficial ownership of which is
held by 100 or more persons; (7) during the last half of each taxable year not
more than 50% in value of the outstanding stock of which is owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities); and (8) that meets certain other tests, described below,
regarding the nature of its income and assets. The Company believes that it
currently satisfies requirements (1) through (7). In addition, the Charter
includes restrictions regarding the transfer of the Company's Common Stock that
are intended to assist the Company in continuing to satisfy the share ownership
requirements described in (6) and (7) above. See "Restrictions on Transfers of
Capital Stock."
In addition, the Company intends to continue to comply with the Treasury
Regulations requiring it to ascertain the actual ownership of its shares. The
Taxpayer Relief Act eliminates the rule that a failure to comply with these
Regulations will result in a loss of REIT status. Instead, a failure to comply
with these regulations will result in a fine. This provision will be effective
for the Company's taxable year ending December 31, 1998.
The Company currently has one "qualified REIT subsidiary." A corporation
that is a "qualified REIT subsidiary" is not treated as a separate corporation
for federal income tax purposes, and all assets, liabilities and items of
income, deduction and credit of a "qualified REIT subsidiary" are treated as
assets, liabilities and items of the REIT. In applying the requirements
described herein, the Company's "qualified REIT subsidiary" will be ignored,
and all assets, liabilities and items of income, deduction and credit of such
subsidiary will be treated as assets, liabilities and items of the Company.
The Company's "qualified REIT subsidiary" will therefore not be subject to
federal corporate income taxation, although it may be subject to state or local
taxation.
In the case of a REIT that is a partner in a partnership, the REIT is
deemed to own its proportionate share of the assets of the partnership and is
deemed to receive the income of the partnership attributable to such share. In
addition, the character of the assets and gross income of the partnership shall
retain the same character in the hands of the REIT. Thus, the Company's
proportionate share of the assets, liabilities and items of income of the
Operating Partnership and the Financing Partnership, are treated as assets,
liabilities and items of income of the Company for purposes of applying the
requirements described herein, provided that the Operating Partnership and the
Financing Partnership are treated as partnerships for federal income tax
purposes. See "-Other Tax Considerations-Effect of Tax Status of the Operating
Partnership and the Financing Partnership on REIT Qualification."
INCOME TESTS. In order to qualify as a REIT, there are three gross
income requirements that must be satisfied annually. First, at least 75% of
the REIT's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and, in certain circumstances, interest) or from certain types
of temporary investments. Second, at least 95% of the REIT's gross income
(excluding gross income from prohibited transactions) for each taxable year
must be derived from the same items which qualify under the 75% gross income
test, and from dividends, interest and gain from the sale or disposition of
stock or securities, or from any combination of the foregoing. Third, short-
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<PAGE>
term gain from the sale or other disposition of stock or securities, gain from
prohibited transactions and gain on the sale or other disposition of real
property held for less than four years (apart from involuntary conversions and
sales of foreclosure property) must represent less than 30% of the REIT's gross
income (including gross income from prohibited transactions) for each taxable
year. The Taxpayer Relief Act repeals the 30% gross income test for taxable
years beginning after its enactment. Thus, the 30% gross income test will no
longer apply after the Company's taxable year ending December 31, 1997.
Rents received by the Company will qualify as "rents from real property"
in satisfying the gross income requirements for a REIT described above only if
several conditions (related to the identity of the tenant, the computation of
the rent payable and the nature of the property leased) are met. The Company
does not anticipate receiving rents in excess of a DE MINIMIS amount of gross
annual revenue that fail to meet these conditions. Finally, for rents received
to qualify as "rents from real property," the Company generally must not
operate or manage the property or furnish or render services to tenants, other
than through an "independent contractor" from whom the Company derives no
revenue. The "independent contractor" requirement, however, does not apply to
the extent the services provided by the Company are "usually or customarily
rendered" in connection with the rental of space for occupancy only and are not
otherwise considered "rendered to the occupant." The Taxpayer Relief Act
provides a DE MINIMIS rule for non-customary services which is effective for
taxable years beginning after August 5, 1997. If the value of the non-
customary service income with respect to a property (valued at no less than
150% of the Company's direct cost of performing such services) is 1% or less of
the gross income derived from the property, then all rental income except the
non-customary service income will qualify as "rents from real property." This
provision will be effective for the Company's taxable year ending December 31,
1998.
The Company provides certain services with respect to the Properties
through the Operating Partnership, which is not an "independent contractor."
However, the Company believes all of the services provided by the Company
through the Operating Partnership are considered "usually or customarily
rendered" in connection with the rental of retail and other space for
occupancy. If the Company contemplates providing services in the future that
may be reasonably expected not to meet the "usual or customary" standard, it
will arrange to have such services provided by an independent contractor from
which the Company and the Operating Partnership will receive no income.
The Company will receive some income that is not qualifying income for
purposes of the 75% and 95% gross income tests. Such income includes
management and leasing fee income from the management by the Operating
Partnership of retail properties not wholly owned by the Operating Partnership
and certain parking income. Such income is not expected to exceed 1% to 2% of
the Operating Partnership's gross income and, therefore, will not cause the
Company to fail to satisfy the 75% or 95% gross income test.
If the Company fails to satisfy one or both of the 75% or the 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code. It
is not possible, however, to state whether in all circumstances the Company
would be entitled to the benefit of these relief provisions. Even if these
relief provisions were to apply, a tax would be imposed on certain excess net
income.
ASSET TESTS. The Company, at the close of each quarter of its taxable
year, must also satisfy three tests relating to the nature of its assets:
(i) at least 75% of the value of the Company's total assets must be represented
by "real estate assets," cash, cash items and government securities; (ii) not
more than 25% of the Company's total assets may be represented by securities
other than those in the 75% asset class; and (iii) of the investments included
in the 25% asset class, the value of any one issuer's securities (other than an
interest in a partnership or shares of a "qualified REIT subsidiary" or another
REIT) owned by the Company may not exceed 5% of the value of the Company's
total assets, and the Company may not own more than 10% of any one issuer's
outstanding voting securities (other than an interest in a partnership or
securities of a "qualified REIT subsidiary" or another REIT).
31
After initially meeting the assets tests at the close of any quarter, the
Company will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset
values. If the failure to satisfy the asset tests results from an acquisition
of securities or other property during a quarter, the failure can be cured by
disposition of sufficient nonqualifying assets within 30 days after the close
of that quarter. The Company maintains adequate records of the value of its
assets to ensure compliance with the asset tests and plans to take such other
action within 30 days after the close of any quarter as may be required to cure
any noncompliance. However, there can be no assurance that such other action
will always be successful.
ANNUAL DISTRIBUTION REQUIREMENTS. To qualify as a REIT, the Company
generally must distribute to its stockholders at least 95% of its income each
year. In addition, the Company will be subject to regular capital gains and
ordinary corporate tax rates on undistributed income, and also may be subject
to a 4% excise tax on undistributed income in certain events. The Company
believes that it has made, and intends to continue to make, timely
distributions sufficient to satisfy the annual distribution requirements. It
is possible, however, that the Company, from time to time, may not have
sufficient cash or other liquid assets to meet the distribution requirements.
In that event, the Company may cause the Operating Partnership to arrange for
short-term, or possibly long-term, borrowing to permit the payments of required
dividends.
Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirement for a year by paying a "deficiency
dividend" (plus applicable penalties and interest) within a specified period.
FAILURE TO QUALIFY. If the Company fails to qualify for taxation as a
REIT in any taxable year and special relief provisions do not apply, the
Company will be subject to tax (including any applicable alternative minimum
tax) on its taxable income at regular corporate rates. Distributions to
stockholders in any year in which the Company fails to qualify as a REIT will
not be deductible, nor will they be required to be made. In such event, to the
extent of current and accumulated earnings and profits, all distributions to
stockholders will be taxable as ordinary income and, subject to certain
limitations in the Code, corporate distributees may be eligible for the
"dividends received deduction." Unless entitled to relief under specific
statutory provisions, the Company also will be disqualified from taxation as a
REIT for the four taxable years following the year during which qualification
was lost. It is not possible to state whether in all circumstances the Company
would be entitled to such statutory relief.
TAXATION OF STOCKHOLDERS
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS. As long as the Company
qualifies as a REIT, distributions made to the Company's taxable domestic
stockholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by them as
ordinary income, and corporate stockholders will not be eligible for the
dividends received deduction as to such amounts. Distributions that are
designated as capital gain dividends will be taxed as long-term capital gains
(to the extent they do not exceed the Company's actual net capital gain for the
taxable year) without regard to the period for which the stockholder has held
its stock. However, corporate stockholders may be required to treat up to 20%
of certain capital gain dividends as ordinary income. The Taxpayer Relief Act
provides that, beginning with the Company's taxable year ending December 31,
1998, if the Company elects to retain and pay income tax on any net long-term
capital gain, domestic stockholders of the Company would include in their
income as long-term capital gain their proportionate share of such net long-
term capital gain. A domestic stockholder would also receive a refundable tax
credit for such stockholder's proportionate share of the tax paid by the
Company on such retained capital gains and an increase in its basis in the
stock of the Company in an amount equal to the difference between the
undistributed long-term capital gains and the amount of tax paid by the
Company. Distributions in excess of current and accumulated earnings and
profits will not be taxable to a stockholder to the extent that they do not
exceed the adjusted basis of the stockholder's Common Stock, but rather will
reduce the adjusted basis of such Common Stock. To the extent that such
distributions exceed the adjusted basis of a stockholder's Common Stock, they
will be included in income as long-term capital gain (or short-term capital
gain if the Common Stock has been held for one year or less), assuming the
Common Stock is a capital asset in the hands of the stockholder. In addition,
any dividend declared by the Company in October, November or December of any
year and payable to a stockholder of record on a specific date in any such
month shall be treated as both paid by the Company and received by the
stockholder on December 31 of such year, provided that the dividend is actually
paid by the Company during January of the following calendar year.
Stockholders may not include in their individual income tax returns any net
operating losses or capital losses of the Company.
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<PAGE>
In general, a domestic stockholder will realize capital gain or loss on
the disposition of Common Stock equal to the difference between (i) the amount
of cash and the fair market value of any property received on such disposition,
and (ii) the stockholder's adjusted basis of such Common Stock. Such gain or
loss generally will constitute long-term capital gain or loss if the
stockholder has held such shares for more than one year. Under the Taxpayer
Relief Act, an individual, trust or estate that holds shares of Common Stock
for more than 18 months will be subject to a maximum tax of 20% on gains from
the sale or disposition of such shares. See "-Recent Legislation" below. Loss
upon a sale or exchange of Common Stock by a stockholder who has held such
Common Stock for six months or less (after applying certain holding period
rules) will be treated as a long-term capital loss to the extent of
distributions from the Company required to be treated by such stockholder as
long-term capital gain.
Under certain circumstances, domestic stockholders may be subject to
backup withholding at the rate of 31% with respect to dividends paid.
TAXATION OF TAX-EXEMPT STOCKHOLDERS. Distributions by the Company to a
stockholder that is a tax-exempt entity will not constitute "unrelated business
taxable income" ("UBTI"), provided that the tax-exempt entity has not financed
the acquisition of its Common Stock with "acquisition indebtedness" within the
meaning of the Code and the Common Stock is not otherwise used in an unrelated
trade or business of the tax-exempt entity. In addition, under certain
circumstances, qualified trusts that own more than 10% (by value) of the
Company's shares may be required to treat a certain percentage of dividends as
UBTI. This requirement will only apply if the Company is a "pension-held
REIT." The restrictions on ownership in the Company's Charter should prevent
the Company from being treated as a pension-held REIT.
TAXATION OF NON-U.S. STOCKHOLDERS. The rules governing U.S. federal
income taxation of Non-U.S. Stockholders (persons other than (i) citizens or
residents of the United States; (ii) corporations, partnerships or other
entities created or organized in the United States or any political
subdivisions thereof; or (iii) estates or trusts the income of which is subject
to U.S. federal income taxation regardless of its source) are complex, and no
attempt will be made herein to provide more than a very limited summary of such
rules. Prospective Non-U.S. Stockholders should consult with their own tax
advisors to determine the impact of U.S. federal, state and local income tax
laws with regard to an investment in Common Stock, including any reporting
requirements.
Distributions that are not attributable to gain from sales or exchanges
by the Company of U.S. real property interests and not designated by the
Company as capital gain dividends will be treated as dividends and taxed as
ordinary income to the extent that they are made out of current or accumulated
earnings and profits of the Company. Such distributions are, generally,
subject to a withholding tax equal to 30% of the gross amount of the
distribution, unless an applicable tax treaty reduces that tax. Distributions
in excess of current and accumulated earnings and profits of the Company will
not be taxable to a Non-U.S. Stockholder to the extent that they do not exceed
the adjusted basis of the Non-U.S. Stockholder's Common Stock, but rather will
reduce the adjusted basis of such Common Stock. To the extent that such
distributions exceed the adjusted basis of a Non-U.S. Stockholder's Common
Stock, they will give rise to tax liability if the Non-U.S. Stockholder
otherwise would be subject to tax on any gain from the sale or disposition of
his Common Stock as described below (in which case they also may be subject to
a 30% branch profits tax if the stockholder is a foreign corporation). If it
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the distribution will be subject to withholding tax at the rate applicable to
dividends. However, the Non-U.S. Stockholder may seek a refund of such amounts
from the IRS if it is subsequently determined that such distribution was, in
fact, in excess of current and accumulated earnings and profits of the Company.
For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real
property interests will be taxed to a Non-U.S. Stockholder under the provisions
of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") at the
normal capital gain rates applicable to U.S. stockholders (subject to
applicable alternative minimum tax and a special alternative minimum tax in the
case of nonresident alien individuals). Also, distributions subject to FIRPTA
may be subject to a 30% branch profits tax in the hands of a corporate Non-U.S.
Stockholder not entitled to treaty relief or exemption. The Company is
required by the Code to withhold 35% of any distribution that could be
designated by the Company as a capital gain dividend. This amount is
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<PAGE>
creditable against the Non-U.S. Stockholder's FIRPTA tax liability.
Gain recognized by a Non-U.S. Stockholder upon a sale of Common Stock
will generally not be taxed under FIRPTA if the Company is a "domestically
controlled REIT," defined generally as a REIT in which, at all times during a
specified testing period, less than 50% in value of the stock was held directly
or indirectly by foreign persons. The Company believes that it is a
"domestically controlled REIT" and, therefore, the sale of Common Stock will
not be subject to taxation under FIRPTA. If the gain on the sale of Common
Stock were to be subject to tax under FIRPTA, the Non-U.S. Stockholder would be
subject to the same treatment as U.S. stockholders with respect to such gain
(subject to applicable alternative minimum tax, possible withholding tax and a
special alternative minimum tax in the case of nonresident alien individuals),
and the purchaser of the Common Shares would be required to withhold and remit
to the IRS 10% of the purchase price.
OTHER TAX CONSIDERATIONS
EFFECT OF TAX STATUS OF THE OPERATING PARTNERSHIP AND THE FINANCING
PARTNERSHIP ON REIT QUALIFICATION. All of the Company's investments are through
the Operating Partnership and the Financing Partnership. The Company believes
that the Operating Partnership and the Financing Partnership are properly
treated as partnerships for tax purposes (and not as associations taxable as
corporations). If, however, the Operating Partnership or the Financing
Partnership were treated as an association taxable as a corporation, the
Company would cease to qualify as a REIT. Furthermore, in such a situation,
any partnership treated as a corporation would be subject to corporate income
taxes. Also, in such a situation, the Company would not be able to deduct its
share of any losses generated by any such partnership in computing its taxable
income.
TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES. The Operating
Partnership was formed by way of contributions of appreciated property
(including certain of the Properties). When property is contributed to a
partnership in exchange for an interest in the partnership, the partnership
generally takes a carryover basis in that property for tax purposes equal to
the adjusted basis of the contributing partner in the property, rather than a
basis equal to the fair market value of the property at the time of
contribution (this difference is referred to as a "Book-Tax Difference"). The
partnership agreement of the Operating Partnership and the Financing
Partnership require allocations of income, gain, loss and deduction with
respect to contributed Property to be made in a manner consistent with the
special rules in Section 704(c) of the Code, and the regulations thereunder,
which tend to eliminate the Book-Tax Differences with respect to the
contributed Properties over the life of the Operating Partnership. However,
because of certain technical limitations, the special allocation rules of
Section 704(c) may not always entirely eliminate the Book-Tax Difference on an
annual basis or with respect to a specific taxable transaction such as a sale.
Thus, the carryover basis of the contributed Properties in the hands of the
Operating Partnership could cause the Company to be allocated lower amounts of
depreciation and other deductions for tax purposes than would be allocated to
the Company if all Properties were to have a tax basis equal to their fair
market value at the time of acquisition. The foregoing principles also apply
in determining the earnings and profits of the Company for purposes of
determining the portion of distributions taxable as dividend income. The
application of these rules over time may result in a higher portion of
distributions being taxed as dividends than would have occurred had the Company
purchased its interests in the Properties at their agreed value.
STATE AND LOCAL TAXES. The Company and its stockholders may be subject
to state or local taxation in various state or local jurisdictions, including
those in which it or they transact business or reside. The state and local tax
treatment of the Company and its stockholders may not conform to the federal
income tax consequences discussed above. Consequently, prospective
stockholders should consult with their own tax advisors regarding the effect of
state, local and other tax laws of any investment in the Common Stock of the
Company.
RECENT LEGISLATION
In addition to changes to the requirements for qualification and taxation
as a REIT discussed above, the Taxpayer Relief Act also contains significant
changes to the taxation of capital gains of individuals, trusts and estates.
For gains realized after July 28, 1997, and subject to certain exceptions, the
maximum rate of tax on net capital gains of individuals, trusts and estates
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<PAGE>
from the sale or exchange of capital assets held for more than 18 months has
been reduced to 20%, and the maximum rate is reduced to 18% for assets acquired
after December 31, 2000 and held for more than five years. The maximum rate
for net capital gains attributable to the sale of depreciable real property
held for more than 18 months is 25% to the extent of the deductions for
depreciation with respect to such property. Long term capital gain allocated
to a stockholder by the Company will be subject to the 25% rate to the extent
that the gain does not exceed depreciation on real property sold by the
Company. The maximum rate of capital gains tax for capital assets held for
more than one year but not more than 18 months remains at 28%. The taxation of
capital gains of corporations was not changed by the Taxpayer Relief Act.
LEGAL MATTERS
The validity of the Offered Securities issued hereunder, as well as
certain legal matters described under "Federal Income Tax Considerations," will
be passed upon for the Company by Rogers & Wells, New York, New York, and
certain legal matters will be passed upon for any underwriters, dealers or
agents by the counsel named in the applicable Prospectus Supplement. Rogers &
Wells will rely as to certain matters of Maryland law on the opinion of Piper &
Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
JP Realty, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1996, and the audited historical financial statements included on page F-2
of JP Realty, Inc.'s Current Report on Form 8-K, dated June 30, 1997 have been
so incorporated in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
35
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses (not including
underwriting commissions and fees) in connection with the issuance and
distribution of the securities being registered hereunder. Except for the
Securities and Exchange Commission registration fee, all amounts are estimates.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission
registration fee.................................................................. $105,171
NYSE filing fees.................................................................... _______*
Accounting fees and expenses........................................................ _______*
Attorneys' fees and expenses........................................................ _______*
Miscellaneous expenses.............................................................. _______*
Total......................................................................... $_______*
<FN>
_____________________
* To be filed by amendment or by a current report on Form 8-K pursuant to the Securities
Exchange Act of 1934, as appropriate.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Maryland General Corporation Law (the "MGCL"), the
Company's Charter obligates the Company to indemnify its present and former
directors and officers and to pay or reimburse expenses for these individuals
in advance of the final disposition of a proceeding to the maximum extent
permitted from time to time by Maryland law. The Company's By-Laws obligate
the Company to indemnify and advance expenses to present and former directors
and officers to the maximum extent permitted by Maryland law. The MGCL permits
a corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by them in connection with any proceeding to which
they may be made a party by reason of their service in those or other
capacities, unless it is established that (a) the act or omission of the
director or officer was material to the matter giving rise to the proceeding
and (i) was committed in bad faith, or (ii) was the result of active and
deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful.
The MGCL permits the Articles of Incorporation of a Maryland corporation
to include a provision limiting the liability of its directors and officers to
the corporation and its stockholders for money damages, except to the extent
that (1) it is provided that the person actually received an improper benefit
or profit in money, property or services or (2) a judgment or other final
adjudication is entered in a proceeding based on a finding that the person's
action, or failure to act, was the result of active and deliberate dishonesty
and was material to the cause of action adjudicated in the proceeding. The
Company's Charter contains a provision providing for elimination of the
liability of its directors or officers to the Company or its stockholders for
money damages to the maximum extent permitted by Maryland law from time to
time.
ITEM 16. EXHIBITS.
1.1 Form of Underwriting Agreement (for Common Stock)*
1.2 Form of Underwriting Agreement (for Preferred Stock)*
1.3 Form of Underwriting Agreement (for Common Stock Warrants)*
II-1
<PAGE>
1.4 Form of Underwriting Agreement (for Debt Securities)*
3.1 Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3(a) to the Company's
Registration Statement on Form S-11 (File No. 33-68844))
3.2 Amended and Restated By-Laws of the Company (incorporated by
reference to Exhibit 3(b) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997 (File No. 1-12560))
3.3 Form of Articles Supplementary of the Company*
3.4 Amended and Restated Agreement of Limited Partnership of the
Operating Partnership (incorporated by reference to Exhibit 10(a)
to the Company's Registration Statement on Form S-11 (File No. 33-
68844))
4.1 Specimen of Common Stock Certificate (incorporated by reference to
Exhibit 4 to the Company's Registration Statement on Form S-11
(File No. 33-68844))
4.2 Form of Preferred Stock Certificate*
4.3 Form of Common Stock Warrant Agreement*
4.4 Form of Deposit Agreement (for Preferred Stock)*
4.5 Form of Indenture*
4.6 Form of Debt Security*
4.7 Form of Guarantee*
5.1 Opinion of Rogers & Wells*
5.2 Opinion of Piper & Marbury L.L.P.*
8 Opinion of Rogers & Wells re: tax matters*
12 Calculation of Ratios of Earnings to Fixed Charges*
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Rogers & Wells (contained in its opinions filed as
Exhibits 5.1 and 8)*
23.3 Consent of Piper & Marbury L.L.P. (contained in its opinion filed
as Exhibit 5.2)*
24 Powers of Attorney (included on page II-4)
_____________________________
* To be filed by amendment or by a Current Report on Form 8-K
pursuant to the Securities Exchange Act of 1934, as appropriate.
ITEM 17. UNDERTAKINGS.
(a) Each of the undersigned Registrants hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that subparagraphs (i) and (ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
II-2
<PAGE>
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by them is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(d) The undersigned registrants hereby undertake to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants certify that they have reasonable grounds to believe that they meet
all of the requirements for filing on Form S-3 and have duly caused this
Registration Statement to be signed on their behalf by the undersigned,
thereunto duly authorized, in the City of Salt Lake City, State of Utah, on
September 2, 1997.
JP REALTY, INC.
By: /S/JOHN PRICE
----------------------------------
John Price
Chairman of the Board of Directors
and Chief Executive Officer
PRICE DEVELOPMENT COMPANY,
LIMITED PARTNERSHIP
By: JP Realty, Inc., as general partner
By: /S/JOHN PRICE
---------------------------------
John Price
Chairman of the Board of Directors
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints John Price and G. Rex Frazier, or any of
them, his true and lawful attorneys-in-fact, with full powers of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments, including any post-effective
amendments, to this Registration Statement, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact or their substitutes may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
/S/JOHN PRICE Chairman of the Board of Directors September 2, 1997
JOHN PRICE and Chief Executive Officer
(Principal Executive Officer)
/S/G. REX FRAZIER President and Chief Operating September 2, 1997
G. REX FRAZIER Officer and Director
/S/M. SCOTT COLLINS Vice President - Chief Financial September 2, 1997
M. SCOTT COLLINS Officer and Treasurer (Principal
Financial and Accounting Officer)
/S/WARREN P. KING Director September 2, 1997
WARREN P. KING
/S/ALLEN P. MARTINDALE Director September 2, 1997
ALLEN P. MARTINDALE
/S/JAMES A. ANDERSON Director September 2, 1997
JAMES A. ANDERSON
/S/SAM W. SOUVALL Director September 2, 1997
SAM W. SOUVALL
/S/ALBERT SUSSMAN Director September 2, 1997
ALBERT SUSSMAN
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
<S> <C> <C>
1.1 Form of Underwriting Agreement (for Common Stock)*
1.2 Form of Underwriting Agreement (for Preferred Stock)*
1.3 Form of Underwriting Agreement (for Common Stock Warrants)*
1.4 Form of Underwriting Agreement (for Debt Securities)*
3.1 Amended and Restated Articles of Incorporation for the Company
(incorporated by reference to Exhibit 3(a) to the Company's Registration
Statement on Form S-11 (File No. 33-68844))
3.2 Amended and Restated By-Laws of the Company (incorporated by reference
to Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 (File No. 1-12560))
3.3 Form of Articles Supplementary of the Company*
3.4 Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (incorporated by reference to Exhibit 10(a) to the Company's
Registration Statement on Form S-11 (File No. 33-68844))
4.1 Specimen of Common Stock Certificate (incorporated by reference to
Exhibit 4 to the Company's Registration Statement on Form S-11 (File No.
33-68844))
4.2 Form of Preferred Stock Certificate*
4.3 Form of Common Stock Warrant Agreement*
4.4 Form of Deposit Agreement (for Preferred Stock)*
4.5 Form of Indenture*
4.6 Form of Debt Security*
4.7 Form of Guarantee*
5.1 Opinion of Rogers & Wells*
5.2 Opinion of Piper & Marbury L.L.P.*
8 Opinion of Rogers & Wells re: tax matters*
12 Calculation of Ratios of Earnings to Fixed Charges*
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Rogers & Wells (contained in its opinions filed as Exhibits
5.1 and 8)*
23.3 Consent of Piper & Marbury L.L.P. (contained in its opinion filed as
Exhibit 5.2)*
24 Powers of Attorney (included on page II-4)
<FN>
______________________
* To be filed by amendment or by a Current Report on Form 8-K pursuant to the Securities Exchange Act
of 1934, as appropriate.
</TABLE>
II-5
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
__________________________________
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on Form
S-3 of our report dated January 29, 1997 appearing on page F-2 of
JP Realty's Annual Report on Form 10-K for the year ended December
31, 1996. We also consent to the incorporation by reference of our
report dated July 1, 1997, which appears on page F-2 of the Current
Report on Form 8-K dated June 30, 1997. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/S/ PRICE WATERHOUSE LLP
- ------------------------
PRICE WATERHOUSE LLP
Salt Lake City, Utah
September 2, 1997
